CDW Corporation 2021 Annual Report
2021 ANNUAL REPORT
WE MAKE TECHNOLOGY WORK SO PEOPLE CAN
DO GREAT THINGS
CDW Corporation
75 Tri-State International
Lincolnshire, IL 60069
CDW Corporation 2021 Annual Report
2021 ANNUAL REPORT
WE MAKE TECHNOLOGY WORK SO PEOPLE CAN
DO GREAT THINGS
CDW Corporation
75 Tri-State International
Lincolnshire, IL 60069
CDW Corporation 2021 Annual Report
2021 ANNUAL REPORT
WE MAKE TECHNOLOGY WORK SO PEOPLE CAN
DO GREAT THINGS
CDW Corporation
75 Tri-State International
Lincolnshire, IL 60069
CDW’s integrated technology
solutions and services helped
more than 250,000 business,
government, education and
healthcare customers in more
than 150 countries navigate
an increasingly complex
IT landscape and optimize
the return on their
technology investment.
At CDW, everything
we do revolves around
meeting the needs
of our customers.
COMPANY INFORMATION
Principal Location
CDW Corporation
75 Tri-State International
Lincolnshire, IL 60069
(847) 465-6000
Auditors
Ernst & Young LLP
155 North Wacker Drive
Chicago, IL 60606-1787
Common Stock Listing
e company’s common stock is listed on Nasdaq under
the trading symbol CDW.
Transfer Agent, Registrar and Dividend Disbursing Agent
Computershare
P.O. Box 505000
Louisville, KY 40233-5000
Email: web.queries@computershare.com
Telephone: (800) 736-3001 (toll free)
(781 ) 575-3100 (toll number)
Investor Relations Contact
Steven O’Brien
Vice President, Investor Relations
(847) 968-0238
investorr[email protected]om
Upon written request to Investor Relations, we will provide,
free of charge, a copy of our Form 10-K for the fiscal year
ended December 31, 2021.
CDW’s Annual Report, Form 10-K, Form 10-Q, proxy
statement and other filings with the Securities and
Exchange Commission, can be accessed on
investor.cdw.com under SEC filings.
Media Relations Contact
Sara Granack
Vice President, Corporate Communications & Reputation
(847) 419-7411
saragra@cdw.com
Forward-looking Statements
Statements in this annual report that are not statements
of historical fact are forward-looking statements within the
meaning of the federal securities laws, including without limitation
statements regarding the future financial performance of CDW.
ese statements involve risks and uncertainties that may cause
actual results or events to differ materially from those described
in such statements. Important factors that could cause actual
results or events to differ materially from CDW’s expectations, or
cautionary statements, are disclosed under the sections entitled
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” included in CDW’s
Annual Report on Form 10-K for the year ended December 31, 2021
(the “Form 10-K”) and in CDW’s subsequent Quarterly Reports
on Form 10-Q filed with the Securities and Exchange Commission.
Refer to page 3 of the Form 10-K for additional information. CDW
undertakes no obligation to publicly update or revise any forward-
looking statement as a result of new information, future events or
otherwise, except as required by law.
Use of Non-GAAP Financial Measures
Non-GAAP operating income, Non-GAAP operating income
margin, Non-GAAP net income, Non-GAAP net income per diluted
share and Free cash flow are not based on generally accepted
accounting principles in the United States (“non-GAAP”). CDW
believes these non-GAAP financial measures provide helpful
information with respect to the underlying operating performance
of CDW’s business, as they remove the impact of items that
management believes are not reflective of underlying operating
performance. For a reconciliation of these non-GAAP financial
measures to the applicable most comparable US GAAP financial
measures, see page 92 of this Annual Report. Reconciliations for
these financial measures are also included on the investor relations
section of the company website at www.cdw.com. Non-GAAP
measures used by CDW may differ from similar measures used
by other companies, even when similar terms are used to identify
such measures.
CDW CORPORATION
e printer and paper utilized for this report have been certified by the Forest Stewardship
Council® (FSC®), which promotes environmentally appropriate, socially beneficial and
economically viable management of the world’s forests. is report is on paper made from
mixed sources of post-industrial recycled and virgin fiber.
CDW’s integrated technology
solutions and services helped
more than 250,000 business,
government, education and
healthcare customers in more
than 150 countries navigate
an increasingly complex
IT landscape and optimize
the return on their
technology investment.
At CDW, everything
we do revolves around
meeting the needs
of our customers.
COMPANY INFORMATION
Principal Location
CDW Corporation
75 Tri-State International
Lincolnshire, IL 60069
(847) 465-6000
Auditors
Ernst & Young LLP
155 North Wacker Drive
Chicago, IL 60606-1787
Common Stock Listing
e company’s common stock is listed on Nasdaq under
the trading symbol CDW.
Transfer Agent, Registrar and Dividend Disbursing Agent
Computershare
P.O. Box 505000
Louisville, KY 40233-5000
Email: web.queries@computershare.com
Telephone: (800) 736-3001 (toll free)
(781 ) 575-3100 (toll number)
Investor Relations Contact
Steven O’Brien
Vice President, Investor Relations
(847) 968-0238
investorr[email protected]om
Upon written request to Investor Relations, we will provide,
free of charge, a copy of our Form 10-K for the fiscal year
ended December 31, 2021.
CDW’s Annual Report, Form 10-K, Form 10-Q, proxy
statement and other filings with the Securities and
Exchange Commission, can be accessed on
investor.cdw.com under SEC filings.
Media Relations Contact
Sara Granack
Vice President, Corporate Communications & Reputation
(847) 419-7411
saragra@cdw.com
Forward-looking Statements
Statements in this annual report that are not statements
of historical fact are forward-looking statements within the
meaning of the federal securities laws, including without limitation
statements regarding the future financial performance of CDW.
ese statements involve risks and uncertainties that may cause
actual results or events to differ materially from those described
in such statements. Important factors that could cause actual
results or events to differ materially from CDW’s expectations, or
cautionary statements, are disclosed under the sections entitled
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” included in CDW’s
Annual Report on Form 10-K for the year ended December 31, 2021
(the “Form 10-K”) and in CDW’s subsequent Quarterly Reports
on Form 10-Q filed with the Securities and Exchange Commission.
Refer to page 3 of the Form 10-K for additional information. CDW
undertakes no obligation to publicly update or revise any forward-
looking statement as a result of new information, future events or
otherwise, except as required by law.
Use of Non-GAAP Financial Measures
Non-GAAP operating income, Non-GAAP operating income
margin, Non-GAAP net income, Non-GAAP net income per diluted
share and Free cash flow are not based on generally accepted
accounting principles in the United States (“non-GAAP”). CDW
believes these non-GAAP financial measures provide helpful
information with respect to the underlying operating performance
of CDW’s business, as they remove the impact of items that
management believes are not reflective of underlying operating
performance. For a reconciliation of these non-GAAP financial
measures to the applicable most comparable US GAAP financial
measures, see page 92 of this Annual Report. Reconciliations for
these financial measures are also included on the investor relations
section of the company website at www.cdw.com. Non-GAAP
measures used by CDW may differ from similar measures used
by other companies, even when similar terms are used to identify
such measures.
CDW CORPORATION
e printer and paper utilized for this report have been certified by the Forest Stewardship
Council® (FSC®), which promotes environmentally appropriate, socially beneficial and
economically viable management of the world’s forests. is report is on paper made from
mixed sources of post-industrial recycled and virgin fiber.
CDW CORPORATION 1
Two Extraordinary Years
e past two extraordinary years
changed our world, our business
and our lives. In the blink of an eye,
organizations of all types and sizes
were forced to dramatically and rapidly
change how they operate. To change
how and where they worked, learned,
connected and served their customers,
communities and stakeholders.
After successfully navigating 2020,
we, like so many others, entered 2021
with optimism for a return to “normal.”
Instead, the world experienced a
rollercoaster ride of great hope and
dismay as we faced wave after wave
of COVID-19.
Our customers’ priorities evolved
as the world evolved. In 2020,
technology was vital to survive.
Customers needed technology to
immediately and unexpectedly pivot
to meet unprecedented work from
home and learn from home needs.
In 2021, while remote enablement
remained a key priority, customers
also sought technology to adapt and
thrive in today’s new world. To create
competitive advantage and reinvent
the future of working, learning and
transacting. To add resiliency to their
operations and strengthen and secure
infrastructure platforms and endpoints.
Amid the greatest global health crisis of
our time came unprecedented supply
challenges. e CDW team did what
they do best – they persevered, pivoted
and powered through. ey leveraged
our competitive advantages – our
distribution centers, extensive logistics
capabilities, deep vendor partner
relationships, and strong balance sheet
and liquidity position. And they worked
tirelessly to help customers solve
challenges from our deep portfolio
whenever possible.
CEO STAKEHOLDER LETTER
“Throughout these two extraordinary years there was one constant –
our unwavering dedication to meet rapidly evolving customer needs
with speed, agility and skill...”
roughout these two extraordinary
years there was one constant – our
unwavering dedication to meet rapidly
evolving customer needs with speed,
agility and skill to deliver the outcomes
our more than 250,000 customers
around the globe turned to us to provide.
Record Financial Performance
Our ability to deliver outcomes for
our customers led to record financial
performance. In 2021, the teams
delivered $21 billion in Net sales with
excellent profitability. Margins improved
and our 13% increase in sales translated
to a 17% increase in both Non-GAAP
operating income and Non-GAAP net
income. Share repurchases amplified
this growth, and Non-GAAP net income
per share increased 21% to $7.97.
Over the past two years, the teams
delivered an annual Net sales compound
growth rate of 7.5%. Profitability
improved at a faster clip with annual
compound growth rates for Gross profit
and Non-GAAP operating income of
8% and 10%, respectively. Combined
Free cash flow
1
reached $1.7 billion
and we returned nearly $2.3 billion
to shareholders through dividends
and share repurchases. Since our
IPO in June 2013, our dividend has
increased over tenfold, including
2021’s 25% increase.
Durable Formula for Success
ese results demonstrate the power
of our durable formula for success –
the unique combination of our
competitive advantages, balanced
customer end-markets, deep and broad
portfolio with our agile, customer-
centric strategy. ey also demonstrate
the incredible dedication and resiliency of
our talented team of 13,900 coworkers.
Time and again, CDW coworkers
demonstrate why they are so vital to
our ability to successfully deliver
industry-leading performance and how
they sustain our unique, performance
driven culture. A culture built over more
than 35 years that has shaped our
shared purpose to make technology
work so people can do great things.
1
Free cash flow is a non-GAAP financial measure. Please refer to “Use of Non-GAAP Financial Measures” on the inside back cover for further information.
CDW CORPORATION 32 CDW CORPORATION
We Make Technology Work
Technology is a means to an end. It’s
not the specific product or service our
customers seek – it’s the outcome
technology delivers. Outcomes that
support our customers so they can do
great things. Great things like deliver
digital education, rural health care, safe
communities and the ability to live life to
the fullest. At its core technology delivers
five outcomes – Innovation, Cost
management, Agility, Risk mitigation,
and Experience, both for customers
and coworkers. We have codified these
into the CDW ICARE framework to
help our sellers and customers define
organizational outcomes. We know
that while technology will evolve, the
ICAR E outcomes technology delivers
will endure. is drives our strategy.
Strategy at CDW is a living, breathing
thing. It is not something that sits on
the shelf. It tells us where we are going,
why we are going there and how we
are going to get there. We never lose
sight of the fact that the long term is
made up of a series of short terms.
at is why our strategy and capital
priorities are intertwined. By doing so,
we invest for the future and deliver
results today. Our track record of success
has demonstrated we can consistently
do both. One reason for this success is
our criteria that investments put the
customer at the center of all we do and
further strengthen our sustainable
competitive advantages. Our top two
strategic priorities – deepening services
and solutions capabilities and our own
digital transformation – achieve both.
Mission Forward
Despite the challenges of the past two
years, we forged ahead with our strategy.
Services capabilities enable complete
solutions – hardware, software, services
and cloud. is is an important source
of differentiation in the marketplace.
Services engagements solve critical
customer problems and drive enduring
customer relationships. Working side
by side with our customers at the front
end of projects, we gain insight into
opportunities to further help them
across a fuller spectrum of solutions.
We also earn a greater share of our
customers’ wallet.
To accelerate our services and solutions
strategy we acquired six companies in
2020 and 2021. On Dec. 1, 2021, we closed
the largest of these acquisitions, Sirius
“While the past two years have been challenging, they also highlight
the boundless opportunity that lies ahead for CDW.”
CDW CORPORATION 32 CDW CORPORATION
Christine A. Leahy
President and Chief Executive Officer
April 7, 2022
Computer Solutions, a leading North
American solutions integrator. Sirius
brings scale to our cloud, digital and
security services practices, expands
in-market customer-facing coverage
and nearly doubles our number of billable
services engineers and our managed
services business. Integration is apace,
with a clear vision and clear accountability.
Our customers are already gaining benefit
from this move to accelerate our services
and solutions strategy.
Internal investments accelerate our
strategy as well. Just as our customers are
leveraging technology as a competitive
advantage to reimage their operations,
so are we. Digital transformation will
further improve seller and all coworker
success. Two great examples of this
include new customer and partner
portals that use our proprietary artificial
intelligence to deliver a reimagined and
differentiated digital experience.
Talent fuels our mission. Coworkers
are the nucleus of the virtuous cycle at
CDW that starts with an idea and ends
with results. In an incredibly tight labor
market, our reputation as a great place
to work enabled us to add nearly 1,000
new coworkers in 2021 – in addition to
the 3,000 talented coworkers that
joined us via acquisition.
When we invest in our coworkers,
we invest in our collective success.
In today’s new world of operating, our
talent investments are laser-focused
on the tools, structure and training
needed to enable coworkers to succeed
from anywhere, anytime. Investments
to ensure CDW is the best place to
work and serve our customers and
partners better than anyone else can.
Investments that help coworkers reach
their maximum opportunity, so they
can deliver maximum impact.
Maximum Impact
At CDW, our focus on maximum impact
isn’t limited to our coworkers and
customers. We know our success is
amplified when we deliver maximum
impact across all stakeholders –
shareholders, coworkers, customers,
partners and our communities. Our social
impact focus area of digital equity is a
great example of this in action. Digital
equity seeks to empower all learners to
reach their unlimited potential through
technology. Potential that is unlocked
through access to digital resources,
education and workforce development.
e CDW Legacy Excellence program in
partnership with the urgood Marshall
College Fund and four premier Historically
Black Colleges and Universities is one of
the many ways we are partnering with
others to drive digital equity. It is also one
of the ways we are driving CDW diversity,
equity and inclusion outcomes. is
exciting program is just the beginning.
We know that when we focus and direct
the full power of CDW behind our efforts,
we deliver. You can learn more about how
our efforts are driving outcomes across
ESG and diversity, equity and inclusion
in CDW’s 2021 Environmental, Social
and Governance report.
Looking to the Future
We enter 2022 with a great strategy
and momentum. Technology is no
longer viewed as a cost to the business
but instead an asset of innovation. As
data proliferates at an exponential rate
organizations of all types and sizes are
searching for ways to unlock the potential
of technology. At the same time, more
and more users are accessing data
from multiple locations and security is
paramount. CDW is well prepared to
meet these needs, today and tomorrow.
While the past two years have been
challenging, they also highlight the
boundless opportunity that lies ahead
for CDW. If the pandemic has shown us
anything, it is that technology is essential
to all sectors of our economy and will
play an increasingly important role in
the years ahead. Our role as a trusted,
strategic partner to our customers is
more important now than ever.
ere will be challenges, uncertainties
and risks but I am confident the
combination of our durable business
model and incredible coworkers will
more than prevail – just as we have the
past two extraordinary years. We will
continue to be our customers’ partner
of choice as we make technology work
so people can do great things.
With Gratitude
As we move into 2022, I want to thank
our more than 250,000 customers
around the world for the trust and
confidence you place in us every day.
You are why we exist. I want to thank
the more than 1,000 world class
technology companies we work with
for your partnership and collaboration,
especially during the past two years of
unprecedented supply challenges. Finally,
I want to thank our incredible, dedicated
CDW coworkers. You are the reason why
CDW is the best place for the best people.
“When we invest in our
coworkers we invest in
our collective success.”
“Technology is no longer viewed as a cost to the business but instead
an asset of innovation.”
GOVERNANCE AND LEADERSHIP
Virginia C. Addicott
Retired President &
Chief Executive Officer,
FedEx Custom Critical
James A. Bell
Retired Executive Vice President,
Corporate President & Chief
Financial Officer,
e Boeing Company
Lynda M. Clarizio
Former Executive Vice President,
Strategic Initiatives,
e Nielsen Company (US), LLC
Paul J. Finnegan
Co-Chief Executive Officer,
Madison Dearborn Partners, LLC
Anthony R. Foxx
Former United States Secretary
of Transportation
Christine A. Leahy
President & Chief Executive Officer,
CDW Corporation
Sanjay Mehrotra
President & Chief Executive Officer,
Micron Technology, Inc.
David W. Nelms
Non-Executive Chairman of
the Board; Retired Chairman &
Chief Executive Officer,
Discover Financial Services, Inc.
Joseph R. Swedish
Retired Chairman, President &
Chief Executive Officer,
Anthem, Inc.
Donna F. Zarcone
Retired President &
Chief Executive Officer,
e Economic Club of Chicago
Corporate Officers
Christine A. Leahy
President & Chief Executive Officer
Jill M. Billhorn
Senior Vice President, Corporate Sales
Sona Chawla
Chief Growth & Innovation Officer
Mark C. Chong
Senior Vice President, Integration Lead
Elizabeth H. Connelly
Chief Human Resources Officer &
Senior Vice President,
Coworker Services
Christina M. Corley
Chief Commercial & Operating Officer
Andrew J. Eccles
Senior Vice President, Integrated
Technology Solutions
Robert F. Kirby
Senior Vice President, Public Sales
Frederick J. Kulevich
Senior Vice President, General
Counsel & Corporate Secretary
Albert J. Miralles
Senior Vice President &
Chief Financial Officer
Ilaria Mocciaro
Vice President, Controller &
Chief Accounting Officer
Aletha C. Noonan
Senior Vice President, Product &
Partner Management
Sanjay Sood
Senior Vice President &
Chief Technology Officer
Robert J. Welyki
Vice President, Treasurer &
Assistant Secretary
4 CDW CORPORATION
Board of Directors
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-35985
CDW CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
26-0273989
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
75 Tri-State International
Lincolnshire , Illinois 60069
(Address of principal executive offices)
(Zip Code)
(847) 465-6000
(Registrant’s telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Common stock, par value $0.01 per share CDW Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ý Yes ¨ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes ý No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. ý Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). ý Yes ¨ No
Table of Contents
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer ý
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. Yes ☒ No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2021, the last business
day of the registrant’s most recently completed second fiscal quarter, was $24,115 million, based on the per share closing sale price of $174.65 on
that date.
As of February 24, 2022, there were 134,944,328 shares of common stock, $0.01 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain parts of the registrant’s definitive proxy statement for its 2022 annual meeting of stockholders to be held on May 19, 2022, which will be
filed with the Securities and Exchange Commission on or before April 30, 2022, are incorporated by reference into Part III of this Annual Report on
Form 10-K.
Table of Contents
CDW CORPORATION AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K
Year Ended December 31, 2021
TABLE OF CONTENTS
Item Page
PART I
Item 1.
Business 4
Item 1A.
Risk Factors 10
Item 1B.
Unresolved Staff Comments 22
Item 2.
Properties 22
Item 3.
Legal Proceedings 22
Item 4.
Mine Safety Disclosures 22
Information about our Executive Officers 23
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities 24
Item 6.
[RESERVED] 26
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations 27
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk 41
Item 8.
Financial Statements and Supplementary Data 42
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 80
Item 9A.
Controls and Procedures 80
Item 9B.
Other Information 82
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 82
PART III
Item 10.
Directors, Executive Officers and Corporate Governance 83
Item 11.
Executive Compensation 83
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 83
Item 13.
Certain Relationships and Related Transactions, and Director Independence 83
Item 14.
Principal Accountant Fees and Services 83
PART IV
Item 15.
Exhibits and Financial Statement Schedules 84
Item 16. Form 10-K Summary
89
SIGNATURES
90
2
FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements” within the meaning of the federal securities laws. All statements other than
statements of historical fact are forward-looking statements. These statements relate to analyses and other information, which
are based on forecasts of future results or events and estimates of amounts not yet determinable. These statements also relate to
our future prospects, developments and business strategies. We claim the protection of The Private Securities Litigation Reform
Act of 1995 for all forward-looking statements in this report.
These forward-looking statements are identified by the use of terms and phrases such as “anticipate,” “assume,” “believe,”
“estimate,” “expect,” “goal,” “intend,” “plan,” “potential,” “predict,” “project,” “target” and similar terms and phrases or future
or conditional verbs such as “could,” “may,” “should,” “will,” and “would.” However, these words are not the exclusive means
of identifying such statements. Although we believe that our plans, intentions and other expectations reflected in or suggested
by such forward-looking statements are reasonable, we cannot assure you that we will achieve those plans, intentions or
expectations. All forward-looking statements are subject to risks and uncertainties that may cause actual results or events to
differ materially from those that we expected.
Important factors that could cause actual results or events to differ materially from our expectations, or cautionary statements,
are disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” included elsewhere in this report. All written and oral forward-looking statements attributable to us,
or persons acting on our behalf, are expressly qualified in their entirety by those cautionary statements as well as other
cautionary statements that are made from time to time in our other Securities and Exchange Commission (“SEC”) filings and
public communications. You should evaluate all forward-looking statements in the context of these risks and uncertainties.
We caution you that the important factors referenced above may not reflect all of the factors that could cause actual results or
events to differ from our expectations. In addition, we cannot assure you that we will realize the results or developments we
expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in
the way we expect. The forward-looking statements included in this report are made only as of the date hereof or, with respect
to any documents incorporated by reference, available at the time such document was prepared or filed with the SEC. We
undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events
or otherwise, except as otherwise required by law.
Table of Contents
3
PART I
Item 1. Business
Our Company
CDW Corporation (together with its subsidiaries, the “Company,” “CDW” or “we”), a Fortune 500 company and member of
the S&P 500 Index, is a leading multi-brand provider of information technology (“IT”) solutions to small, medium and large
business, government, education and healthcare customers in the United States (“US”), the United Kingdom (“UK”) and
Canada. Our broad array of offerings ranges from discrete hardware and software products to integrated IT solutions and
services that include on-premise, hybrid and cloud capabilities across hybrid infrastructure, digital experience and security.
On December 1, 2021, we completed our previously announced acquisition of Sirius Computer Solutions, Inc. (“Sirius”). This
strategic acquisition is expected to enhance our services and solutions capabilities in key areas, including hybrid infrastructure,
security, digital and data innovation, and cloud and managed services, as well as add services scale, further balancing and
diversifying our portfolio mix. The addition of Sirius strengthens our role as the trusted technology advisor to our customers,
with the expertise and portfolio breadth, depth and scale to orchestrate complete customer-centric solutions.
We are vendor, technology and consumption model “agnostic”, with a solutions portfolio including more than 100,000 products
and services from more than 1,000 leading and emerging brands. Our solutions are delivered in physical, virtual and cloud-
based environments through approximately 9,900 customer-facing coworkers, including sellers, highly-skilled technology
specialists and advanced service delivery engineers. We are a leading sales channel partner for many original equipment
manufacturers (“OEMs”), software publishers and cloud providers (collectively, our “vendor partners”), whose products we sell
or include in the solutions we offer. We provide our vendor partners with a cost-effective way to reach customers and deliver a
consistent brand experience through our established end-market coverage, technical expertise and extensive customer access.
We simplify the complexities of technology across design, selection, procurement, integration and management for our
customers. Our goal is to have our customers, regardless of their size, view us as a trusted adviser and extension of their IT
resources. Our multi-brand offering approach enables us to identify the products or combination of products from our vendor
partners that best address each customer’s specific IT requirements.
We have capabilities to provide integrated IT solutions in more than 150 countries for customers with primary locations in the
US, UK and Canada, which are large and growing markets. According to the International Data Corporation (“IDC”), the total
US, UK and Canadian IT market generated approximately $1.2 trillion in sales in 2021. We believe our addressable markets in
the US, UK and Canada represent approximately $400 billion in annual sales. These are highly fragmented markets served by
thousands of IT resellers and solutions providers. For the year ended December 31, 2021, we estimate that our total Net sales of
$20.8 billion represented approximately 5% of our addressable markets. We believe that demand for IT will continue to outpace
general economic growth in the markets we serve, fueled by new technologies, including hybrid and cloud computing,
virtualization and mobility as well as growing end-user demand for security, efficiency and productivity.
Value Proposition
We are positioned in the middle of the IT ecosystem where we procure products from OEMs, software publishers, cloud
providers and wholesale distributors and provide added value to our customers by helping them navigate through complex
options and implement the best solution for their business. In this role, we believe we provide unique value to both our vendor
partners and our customers.
Our value proposition to our customers Our value proposition to our vendor partners
●
Broad selection of products and multi-branded IT solutions
●
Access to over 250,000 customers
●
Value-added services with integration capabilities
●
Large and established customer channels
●
Highly-skilled specialists and engineers
●
Strong distribution and implementation capabilities
●
Solutions across IT lifecycle
●
Customer relationships driving insight into technology
roadmaps
Customers
We provide integrated IT solutions to over 250,000 small, medium and large business, government, education and healthcare
customers throughout the US, UK and Canada.
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We serve our customers through sales teams focused on customer end-markets that are supported by technical specialists and
highly-skilled service delivery engineers. Our market segmentation allows us to customize our offerings and to provide
enhanced expertise in designing and implementing IT solutions that meet our customer’s specific needs.
We have three reportable segments, Corporate, Small Business and Public. Our Corporate segment primarily serves US private
sector business customers with more than 250 employees. Our Small Business segment primarily serves US private sector
business customers with up to 250 employees. Our Public segment is comprised of government agencies and education and
healthcare institutions in the US. We also have two other operating segments: CDW UK and CDW Canada, each of which do
not meet the reportable segment quantitative thresholds and, accordingly, are included in an all other category (“Other”).
In our US business, which represents approximately 90% of our revenues, we currently have five dedicated customer channels:
corporate, small business, government, education and healthcare, each of which generated $1.8 billion or greater in Net sales in
2021. Net sales to customers in the UK and Canada combined generated $2.6 billion in 2021. We believe this diversity of
customer end-markets provides us with multiple avenues for growth and has been a key factor in our ability to weather
economic and technology cycles and continue to gain market share.
Partners
We provide more than 100,000 products and services from more than 1,000 partners, including well-established companies
such as Adobe, APC, Apple, Cisco, Dell EMC, Google, Hewlett Packard Enterprise, HP Inc., IBM, Intel, Lenovo, Microsoft,
NetApp, Nutanix, Palo Alto Networks, Poly, Samsung, and VMware, as well as from emerging technology companies to
expand our portfolio. This broad portfolio of partners and technologies enables us to offer customers significant options and
meet customer demand for the products and solutions that best meet their needs. We believe our value proposition to vendor
partners enables us to evolve our offering as new technologies emerge and new companies seek us as a channel partner.
In 2021, we generated over $1.0 billion each of Net sales from five vendor partners and over $100 million of Net sales from
each of fifteen other vendor partners. We have received the highest level of certification from major vendor partners such as
Cisco, Dell EMC, Hewlett Packard Enterprise, LG, Microsoft, Palo Alto Networks, Samsung, and VMware which reflects the
extensive product and solution knowledge and capabilities that we bring to our customers’ IT challenges. These certifications
also provide us with access to favorable pricing, tools and resources, including vendor incentive programs, which we use to
provide additional value to our customers. Our vendor partners also regularly recognize us with top awards and select us to
develop and grow new customer solutions.
Product Procurement
We may purchase all or only some of the products our vendor partners offer for resale to our customers or for inclusion in the
solutions we offer. Each vendor partner agreement provides for specific terms and conditions, which may include one or more
of the following: product return privileges, price protection policies, purchase discounts and vendor incentive programs, such as
purchase or sales rebates and cooperative advertising reimbursements. We also purchase software from major software
publishers and cloud providers for resale to our customers or for inclusion in the solutions we offer. Our agreements allow us to
resell cloud based solutions, software or other licensed products to the end-user customer.
In addition to purchasing products directly from our vendor partners, we purchase products from wholesale distributors for
resale to our customers or for inclusion in the solutions we offer. These wholesale distributors provide logistics management
and supply-chain services for us, as well as for our vendor partners.
For our US operations in 2021, we purchased approximately 50% of the products we sold as discrete products or as components
of a solution directly from our vendor partners and the remaining 50% from wholesale distributors. Purchases from our two
largest wholesale distributors, Ingram Micro and TD SYNNEX, were over 30% of total US purchases in 2021.
Inventory Management
We operate two distribution centers in North America: a 513,000 square foot facility in North Las Vegas, Nevada, and a
442,000 square foot facility in Vernon Hills, Illinois. We also operate a 120,000 square foot distribution center in Rugby,
Warwickshire, UK. Leveraging our distribution and logistics capabilities, we handle and ship over 45 million units annually on
an aggregate basis from our distribution centers.
We also have drop-shipment arrangements with many of our OEMs and wholesale distributors, which permit us to offer
products to our customers without having to take physical delivery at our distribution centers. These arrangements represented
approximately 50% of total North America Net sales in 2021. Electronic delivery for software licenses is approximately 20% of
total North America Net sales in 2021.
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We believe that the location of our distribution centers allows us to efficiently ship products to our customers and provide
timely access to our principal distributors. We believe that our logistics and configuration capabilities delivered by our highly
skilled and certified team enable us to customize technology for our customers to meet their unique needs.
We believe competitive sources of supply are available in substantially all of the product categories that we offer.
Competition
The market for technology products and services is highly competitive and subject to economic conditions and rapid
technological changes. Competition is based on many things, including the ability to tailor specific solutions to customer needs,
the quality and breadth of product and service offerings, knowledge and expertise of sales force, customer service, price,
product availability, speed of delivery and credit availability. We face competition from resellers, direct manufacturers, large
service providers, cloud providers, telecommunication companies, and to a lesser extent e-tailers and retailers. Smaller, local or
regional value-added resellers typically focus on a single solution suite or portfolio of solutions from one or two vendor
partners.
We believe we are well positioned to compete within this marketplace due to our competitive advantages. We expect the
competitive landscape to continue to evolve as new technologies are developed. While innovation can help our business as it
creates new offerings for us to sell, it can also disrupt our business model and create new and stronger competitors. For
additional information on the risks associated with competition, see “Item 1A. Risk Factors.”
We believe we have sustainable competitive advantages that differentiate us in the marketplace. We have built a strong sales
organization and deep services and solutions capabilities over time and expect to continue to invest to enhance these
capabilities, which we believe when combined with our competitive advantages of scale and a performance driven culture, will
help drive sustainable, profitable growth for us today and in the future. Our scale enables us to have a national and international
footprint, as well as invest in resources to meet specific customer end-market needs. Our sellers are organized around unique
customer end-markets that are both vertically and geographically focused. Our scale enables our ability to invest in technical
coworkers who work directly with our sellers to help customers implement increasingly complex IT solutions. Our scale also
enables us to operate our three distribution centers (two in the US and one in the UK), which combined are more than 1 million
square feet in size. We have cross-border relationships that enable us to serve the needs of our US, UK and Canadian-based
customers in more than 150 countries. Our strong, execution-oriented culture is underpinned by our compensation system.
Our Offerings
Our offerings range from discrete hardware and software products and services to complex integrated solutions including one or
more of these elements. We believe our customers increasingly view technology purchases as integrated solutions rather than
discrete product and services categories. We estimate that more than 40% of our Net sales in 2021 in the US came from sales of
product categories and services typically associated with solutions. Our hardware products include notebooks/mobile devices
(including tablets), network communications, desktop computers, video monitors, enterprise and data storage, and other
hardware. Our software products include application suites, security, virtualization, operating systems and network
management. Our services include advisory and design, software development, implementation, managed services and
warranties.
IT is critical to both “run the business” and drive greater growth and productivity. To help our customers accomplish this, we
have built a robust portfolio of solutions across hybrid infrastructure, digital experience, security and services that we provide in
physical, virtual, or cloud-based environments.
We provide customers with cloud solutions and services through public cloud solutions, which reside off customer premises on
a public (shared) infrastructure, private cloud solutions, which reside on customer premises, and hybrid cloud solutions that
deliver the benefits of both public and private solutions. Our migration, integration and managed services help our customers
simplify cloud adoption, as well as the ongoing management of cloud solutions, across the entire IT lifecycle. Service delivery
engineers work with our customers to design cloud solutions meeting their organizational, technology and financial objectives.
We offer a broad portfolio of integrated solutions that include the following on-premise, hybrid and cloud capabilities:
• Services: We help organizations design, orchestrate and manage technology for their unique needs. Our offerings are
designed to highlight our expertise in the most critical technology areas for our customers. Our service delivery
engineers have expertise which include integrated cloud, collaboration, data center, mobility and security business
technology, from the physical to the application layer. We leverage best-in-class partner technology platforms to
seamlessly architect and manage disparate IT platforms into integrated business technology solutions.
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• Hybrid Infrastructure: We assess our customers application infrastructure need, design flexible, resilient and efficient
solutions and manage the solution throughout its lifecycle. Our broad portfolio of hardware and software products,
encompassing both on and off-premise solutions, enables us to provide well-integrated solutions, including converged
and hyper-converged infrastructure, physical and virtualized servers, software defined automation and orchestration
solutions, hybrid storage, energy-efficient power and cooling, and data center networking.
• Digital Experience: We build end-to-end solutions that deliver access to applications that improve our customers’
productivity regardless of device or location. We connect our customers’ physical devices, including laptops, desktops,
IP Phones, mobile devices and print systems. We utilize collaboration solutions to unite applications via the integration
of products that facilitate the use of multiple enterprise communication methods including email, persistent chat, social
media, voice and video. We also host cloud-based collaboration solutions. Our solutions provide the tools that allow
our customers’ employees to share knowledge, ideas and information among each other and with clients and partners
effectively, securely and quickly.
• Security: We assess our customers’ security needs and provide them with tools and services to help effectively manage
risk. We are a security solutions integrator that combines our expertise in design, solution architecture and
implementation services. Our customer solutions can take the form of hardware, software or Software as a Service
across a multitude of categories such as: endpoint security, email security, web security, intrusion prevention,
authentication, firewall, virtual private network services and network access control. Security consulting engagements
include security assessment, policy and procedure gap analysis, security roadmaps and health checks.
Although we believe customers increasingly view technology purchases as solutions rather than discrete product and service
categories, our Net sales by major category, based upon our internal category classifications, was as follows
Year Ended December 31,
2021 2020 2019
Dollars in
Millions
Percentage
of Total
Net Sales
Dollars in
Millions
Percentage
of Total
Net Sales
Dollars in
Millions
Percentage
of Total
Net Sales
Notebooks/Mobile Devices
$ 6,659.4 32.0 % $ 5,486.2 29.7 % $ 4,344.9 24.1 %
Netcomm Products
1,950.9 9.4 1,955.0 10.6 2,189.1 12.1
Desktops
1,203.6 5.8 1,132.4 6.1 1,547.3 8.6
Video
1,605.0 7.7 1,190.8 6.4 1,272.9 7.1
Enterprise and Data Storage
(Including Drives)
992.1 4.8 947.4 5.1 1,147.6 6.4
Other Hardware
4,358.6 20.9 4,121.6 22.3 3,980.4 22.1
Total Hardware
16,769.6 80.6 14,833.4 80.2 14,482.2 80.4
Software
(1)
2,802.4 13.5 2,581.0 14.0 2,585.0 14.3
Services
(1)
1,126.1 5.4 913.9 4.9 840.9 4.7
Other
(2)
122.7 0.5 139.2 0.9 124.3 0.6
Total Net sales
$ 20,820.8 100.0 % $ 18,467.5 100.0 % $ 18,032.4 100.0 %
(1) Certain software and services revenue is recorded on a net basis for accounting purposes, so the category percentage of
Net sales is not representative of the category percentage of gross profits.
(2) Includes items such as delivery charges to customers.
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Our Internal Capabilities
Human Capital Management
Our culture is reflected through our coworkers, who are driven to serve our customers, our partners, our communities and all
our stakeholders. We provide our coworkers with diverse experiences, engagement opportunities, strong training and
development, competitive compensation and meaningful careers, which creates a high-performance culture that is central to
CDW’s success. We know that an inclusive environment produces the best ideas and our coworkers are driven to finding the
best technology solutions to enable the mission-driven needs of our customers.
We have approximately 13,900 coworkers across the globe, with 11,500 coworkers in the US, 1,500 in the UK and 900 in
Canada. More than 50% of our US Net sales are generated by account managers who have more than seven years of tenure with
CDW. Our coworker relations are strong and none of our coworkers are covered by collective bargaining agreements.
Diversity, Equity and Inclusion
CDW’s commitment to diversity, equity and inclusion is a core value-shaping who we are, and how we work, grow and do
business. We remain steadfast in our commitment to a culture of inclusion and equity, where everyone feels they belong.
Our diversity, equity and inclusion efforts prioritize fostering an inclusive environment for coworkers and job candidates that
cannot be separated from how we work with customers, partners and the community. It all comes back to our character, values
and ethics as an organization. We are intent on making sure our values are not just words on a page, but spur behavior where
everyone feels they are seen, heard and valued.
Coworker Engagement
We strive to create a culture of collaboration, belonging and individual growth and reward – one in which every coworker has a
voice and where all voices are heard. Our coworker engagement strategy utilizes frequent, short surveys as well as virtual
listening groups to gain a real-time understanding of the coworker experience at CDW. As a result of our coworkers’ consistent
engagement, we have garnered meaningful feedback and recommendations, which have led to measurable and impactful
results.
Training & Development
We focus on skills enhancement, leadership development, innovation excellence and professional growth throughout our
coworkers’ careers at CDW. Our programs include: leadership development trainings, unique developmental opportunities for
our high-potential emerging leaders, a 24-month training program for new North American sales coworkers, technical skill
development training, an 18-month apprentice-style program for aspiring engineers, and coworker access to over 15,000 on-
demand educational modules.
Total Rewards
Our Pay-for-Performance total rewards philosophy provides market competitive compensation aligned with company
performance. We further align our sellers’ compensation to their individual performance by providing substantially uncapped
commission opportunity. We provide a comprehensive benefits package to our coworkers, including healthcare, retirement
plans with profit sharing and match, tuition assistance, inclusive parental leave policies, adoption assistance, paid time off, paid
volunteer hours and philanthropic match programs based upon eligibility and location.
Health and Safety
At the beginning of the pandemic, we identified three key principles, which have guided us. First, safeguard the health and
well-being of our coworkers, second, serve the mission-driven needs of our customers, and third, support our communities. We
implemented precautions to help keep our coworkers healthy and safe, including activating a cross-functional response team led
by senior leadership, moving to remote work for our office coworkers, and implementing safety protocols at our distribution
centers, including social distancing measures, segmented shifts, additional personal protective equipment, enhanced facility
cleanings, expanded health and safety training, increased available mental health resources, and increased sick days for
impacted coworkers.
Oversight and Management
Our Coworker Services organization is responsible for the strategy and management of coworker-related matters, working in
concert with all our leaders. Our Board understands the importance of our inclusive, performance-driven culture to our ongoing
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success and is actively engaged with our President and Chief Executive Officer and our Chief Human Resources Officer across
a broad range of human capital management topics.
Marketing
We market the CDW brand to US, UK and Canadian audiences using a variety of channels that include online, broadcast, print,
social and other media. We market to current and prospective customers through integrated marketing programs including
behaviorally targeted email, print, online media, events and sponsorships, as well as broadcast media. This promotion is also
supported by integrated communication efforts targeting decision-makers, influencers and the general public using a
combination of news releases, case studies, media interviews and speaking opportunities.
As a result of our relationships with our vendor partners, a significant portion of our advertising and marketing expenses is
reimbursed through cooperative advertising programs. These programs are at the discretion of our vendor partners and are
typically tied to sales or other commitments to be met by us within a specified period of time. We believe that our results and
analytical techniques that measure the efficacy of our marketing programs differentiate us from our competitors.
Information Technology Systems
We maintain customized IT and unified communication systems that enhance our ability to provide prompt, efficient and expert
service to our customers. In addition, these systems enable centralized management of key functions, including purchasing,
inventory management, billing and collection of accounts receivable, sales and distribution. Our systems provide us with
thorough and detailed information regarding key aspects of our business. These capabilities help us to continuously enhance
productivity, ship customer orders quickly and efficiently, respond appropriately to industry changes and provide high quality
customer service. We believe our websites, which provide electronic order processing and advanced tools, such as order
tracking, reporting and asset management, make it easy for customers to transact business with us and ultimately strengthen our
customer relationships.
History
Founded in 1984, CDW became a public company in 1993. In 2006, we acquired Berbee Information Networks Corporation to
expand our capabilities in customized engineering services and managed services. In 2007, we went private and then became
public again in 2013.
In 2015, we acquired control of 100% of UK-based IT solutions provider, Kelway TopCo Limited. Rebranded CDW UK in
2016, the acquisition extended our footprint into the UK.
In 2019, we acquired Canada-based technology solutions provider, Scalar Decisions Inc.
CDW’s Amplified
TM
Services portfolio has grown into a billion-dollar business over the past few years, aided by acquisitions of
various companies. In addition to the acquisition of Sirius in 2021, an IT solutions integrator, as described above, we further
strengthened our consulting and services expertise by acquiring Aptris, an IT service management solutions provider and
ServiceNow Elite partner, in 2019. In 2020, we acquired IGNW, a cloud-native services, software development and data
orchestration capability provider. In 2021, we acquired Amplified IT, which has expert capability in Google Workspace for
Education and Focal Point Data Risk, which has expert capabilities in cybersecurity services.
Available Information
We maintain a website at www.cdw.com. You may access our Annual Reports on Form 10-K, Quarterly Reports on Form 10-
Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 with the SEC free of charge at our website as soon as reasonably practicable after such
material is electronically filed with, or furnished to, the SEC. Our website and the information contained on that site, or
connected to that site, are not incorporated into and are not a part of this report.
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Item 1A. Risk Factors
There are many factors that could adversely affect our business, results of operations and cash flows, some of which are beyond
our control. The following is a description of some important factors that may cause our business prospects, results of
operations and cash flows in future periods to differ materially from those currently expected or desired. Factors not currently
known to us or that we currently deem to be immaterial may also materially and adversely affect our business, results of
operations and cash flows.
Business and Operational Risks
The outbreak of the novel coronavirus (“COVID-19”) pandemic has adversely impacted and could continue to adversely
impact our business and results of operations and could also adversely impact our cash flows, financial condition and
liquidity.
The global spread of COVID-19 continues to create significant macroeconomic uncertainty, volatility and disruption. Many
governments and health authorities have implemented recommendations or mandates intended to slow the further spread of the
disease, such as shelter-in-place orders, resulting in the temporary closure of schools and non-essential businesses, or social
distancing measures, resulting in modified operations of various businesses including ours, and these measures may remain in
place for a significant period of time. While some of these restrictions have been lifted or eased in certain jurisdictions, other
restrictions such as vaccine mandates and testing requirements have been newly imposed, and the recovery process is uncertain.
We have experienced and could continue to experience disruptions, including as a result of resurgences of COVID-19, that
prevent us from meeting the demands of our customers, such as product constraints from our vendor partners and wholesale
distributors and other disruptions to our supply chain, disruptions in or restrictions on the ability of our coworkers to work
effectively, temporary closures of our distribution facilities, modifications in the operation of facilities that remain open and
disruptions of commercial delivery services. The impact of COVID-19 and measures implemented to slow the spread have
caused and could continue to cause delay in, or limit the ability of, our customers to place orders for our products and services
and make timely payments to us and could materially increase our labor, logistics and other costs. As long as the pandemic
continues, our coworkers will continue to be exposed to health risks, and we could be negatively impacted in the future if a
significant number of our coworkers, or coworkers who perform critical functions, become unable to work as a result of
exposure to COVID-19. In addition, the pandemic has resulted in a widespread health crisis that has adversely affected the
economies and financial markets of many countries, including the US, the UK and Canada. During the COVID-19 pandemic
and even after it has subsided, we may experience adverse impacts to our business as a result of the pandemic’s global
economic impact, including any recession, economic downturn or volatility, government spending cuts, tightening of credit
markets or increased unemployment that has occurred or may occur in the future, which could cause our customers and
potential customers to postpone or reduce spending on technology products or services or put downward pressure on prices. In
addition, we may experience inflationary pressures, resulting in increased product prices that we may be unable to pass on to
our customers.
Individually and collectively, the consequences of the COVID-19 pandemic have adversely impacted and could continue to
adversely impact our business and results of operations and could also adversely impact our cash flows, financial condition and
liquidity. The extent to which the COVID-19 pandemic continues to impact our business, results of operations, cash flows,
financial condition and liquidity will depend on future developments, which are highly uncertain and cannot be predicted,
including, but not limited to, the ultimate duration and severity of the pandemic, future resurgences and emergences of new
variants of the virus, the availability, efficacy and acceptance of a vaccine and treatments, actions taken to contain the virus
including reimplementation of closures, and the effectiveness of these actions, and how quickly and to what extent normal
economic and operating conditions can resume and be sustained. The COVID-19 pandemic has and may continue to have the
effect of heightening many of the other risks described in this “Risk Factors” section.
Our business depends on our vendor partner relationships and the terms of the agreements governing those relationships.
Our solutions portfolio includes products and services from OEMs, software publishers and cloud providers. We are authorized
by these vendor partners to sell all or some of their products and services via direct marketing activities. Our authorization with
each vendor partner is subject to specific terms and conditions regarding such things as sales channel restrictions, product return
privileges, services performance commitments, price protection policies, purchase discounts and vendor partner programs and
funding, including purchase rebates, sales volume rebates, purchasing incentives and cooperative advertising reimbursements.
However, we do not have any long-term contracts with our vendor partners and many of these arrangements are terminable
upon notice by either party. A reduction in vendor partner programs or funding or our failure to timely react to changes in
vendor partner programs or funding could have an adverse effect on our business, results of operations or cash flows. In
addition, a reduction in the amount or a change in the terms of credit granted to us by our vendor partners could increase our
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need for, and the cost of, working capital and could have an adverse effect on our business, results of operations or cash flows,
particularly given our level of indebtedness.
From time to time, vendor partners may terminate or limit our right to sell some or all of their products or change the terms and
conditions or reduce or discontinue the incentives that they offer us. For example, there is no assurance that, as our vendor
partners continue to sell directly to end users and through resellers, they will not limit or curtail the availability of their products
to solutions providers like us. Any such termination or limitation or the implementation of such changes could have a negative
impact on our business, results of operations or cash flows.
We purchase the products included in our portfolio both directly from our vendor partners and from wholesale distributors.
Although we purchase from a diverse vendor base, in 2021, products we purchased from wholesale distributors Ingram Micro
and TD SYNNEX, together, represented over 30% of total US purchases. In addition, sales of products manufactured by Apple,
Cisco, Dell EMC, HP Inc., Lenovo and Microsoft, whether purchased directly from these vendor partners or from a wholesale
distributor, represented over 50% of our 2021 consolidated Net sales. Sales of products manufactured by Dell EMC and Lenovo
represented over 20% of our 2021 consolidated Net sales. The loss of, or change in business relationship with, any of these or
any other wholesale distributors or key vendor partners, or the diminished availability of their products, including due to
backlogs for their products, could reduce the supply and increase the cost of products we sell and negatively impact our
competitive position.
Further, the sale, spin-off or combination of any of our wholesale distributors or key vendor partners and/or certain of their
business units, including any such sale to or combination with a vendor with whom we do not currently have a commercial
relationship or whose products we do not sell, or our inability to develop relationships with new and emerging vendors and
vendors that we have not historically represented in the marketplace, could have an adverse impact on our business, results of
operations or cash flows.
Our sales are dependent on continued innovations in hardware, software and services by our vendor partners and the
competitiveness of their offerings, and our ability to partner with new and emerging technology providers.
The technology industry is characterized by rapid innovation and the frequent introduction of new and enhanced hardware,
software and services, such as cloud-based solutions, including Software as a Service (“SaaS”), Infrastructure as a Service
(“IaaS”) and Platform as a Service (“PaaS”); Device as a Service (“DaaS”); the Internet of Things (“IoT”); and artificial
intelligence (“AI”). We have been and will continue to be dependent on innovations in hardware, software and services, as well
as the acceptance of those innovations by customers. Also, customers may delay spending while they evaluate new
technologies. A decrease in the rate of innovation, a lack of acceptance of innovations by our customers or delays in technology
spending by our customers, could have an adverse effect on our business, results of operations or cash flows.
In addition, if we are unable to anticipate and expand our capabilities to keep pace with changes in technology and new
hardware, software and services, for example by providing the appropriate training to our account managers, technology
specialists and engineers to enable them to effectively sell and deliver such new offerings to customers, our business, results of
operations or cash flows could be adversely affected.
We also are dependent upon our vendor partners for the development and marketing of hardware, software and services to
compete effectively with hardware, software and services of vendors whose products and services we do not currently offer or
that we are not authorized to offer in one or more customer channels. To the extent that a vendor’s offering that is in high
demand is not available to us for resale in one or more customer channels, and there is not a competitive offering from another
vendor that we are authorized to sell in such customer channels, our business, results of operations or cash flows could be
adversely impacted.
Substantial competition could reduce our market share and significantly harm our financial performance.
Our current competition includes:
• resellers and service providers, such as Computacenter, Connection, ePlus, Insight Enterprises, NTT, Optiv, Presidio,
SCC, Softchoice, World Wide Technology and many smaller resellers and service providers;
• manufacturers who sell directly to customers, such as Adobe, Apple, Dell EMC, HP Inc. and Hewlett Packard
Enterprise;
• large service providers and system integrators, such as Accenture, Dell EMC, Hewlett Packard Enterprise and IBM;
• communications service providers, such as AT&T, CenturyLink and Verizon;
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• cloud providers, such as Amazon Web Services, Google and Microsoft;
• e-tailers, such as Amazon and Newegg; and
• retailers (including their e-commerce activities), such as Office Depot and Staples.
We expect the competitive landscape to continue to evolve as new technologies and consumption models emerge, such as
cloud-based and other “as a service” solutions, hyper-converged infrastructure and embedded software solutions. Our continued
competitiveness depends upon our ability to anticipate and evolve at pace and scale with new technologies, services and
solutions through strategic and timely investments in innovation, expansion of offerings and the capabilities necessary to
implement them.
While innovation can help our business as it creates new offerings for us to sell, it can also disrupt our business model and
create new and stronger competitors. For instance, while cloud-based solutions present an opportunity for us, cloud-based
solutions and technology solutions as a service could increase the amount of sales directly to customers rather than through
solutions providers like us, or could reduce the amount of hardware we sell. In addition, some of our hardware and software
vendor partners sell, and could intensify their efforts to sell, their products directly to our customers. Moreover, traditional
OEMs have increased their services capabilities through mergers and acquisitions with service providers, which could
potentially increase competition in the market to provide comprehensive technology solutions to customers. If we are unable to
effectively respond to the evolving competitive landscape, or respond in a manner that is less effective than that of our
competitors, our business, results of operations or cash flows could be adversely impacted.
We focus on providing high quality service to gain new customers and retain existing customers. To the extent we face
increased competition to gain and retain customers, we may be required to reduce prices, increase advertising expenditures or
take other actions which could adversely affect our business, results of operations or cash flows. Additionally, some of our
competitors may reduce their prices in an attempt to stimulate sales, which may require us to reduce prices. This would require
us to sell a greater number of products to achieve the same level of Net sales and Gross profit. If such a reduction in prices
occurs and we are unable to attract new customers and sell increased quantities of products, our sales growth and profitability
could be adversely affected.
The success of our business depends on the continuing development, maintenance and operation of our information
technology systems.
Our success is dependent on the accuracy, proper utilization and continuing operation, maintenance and development of our
information technology systems, including our business systems, such as our sales, customer management, financial and
accounting, marketing, purchasing, warehouse management, e-commerce and mobile systems, as well as our operational
platforms, including voice and data networks and power systems. The quality and our utilization of the information generated
by our information technology systems, and our success in implementing new systems and upgrades, affects, among other
things, our ability to:
• conduct business with our customers, including delivering services and solutions to them;
• provide the means to effectively manage global operations across time zones;
• keep pace with changes and innovation and compete effectively;
• effectuate comprehensive and reliable data collection, maintenance and governance;
• manage our inventory, accounts receivable and accounts payable;
• support planned growth in services and solutions and continued evolution of the business;
• purchase, sell, ship and invoice our hardware and software products and provide and invoice our services efficiently
and on a timely basis; and
• maintain our cost-efficient operating model while scaling our business.
The integrity of our information technology systems is vulnerable to disruption due to forces beyond our control. While we
have taken steps to protect our information technology systems from a variety of threats, both internal and external, and from
human error, there can be no guarantee that those steps will be effective. Furthermore, although we have redundant systems at a
separate location to back up our primary systems, there can be no assurance that these redundant systems will operate properly
if and when required. Any disruption to or infiltration of our information technology systems could significantly harm our
reputation, business and results of operations due to failure to comply with customer, partner, legal or regulatory obligations.
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Breaches of data security and the failure to protect our information technology systems from cybersecurity threats could
adversely impact our business.
Our business involves the handling, storage and transmission of proprietary information and sensitive or confidential data,
including personal information of coworkers, customers, partners and others. In connection with our services business, some of
our coworkers have access to our customers’ confidential data and other information. Additionally, third parties, such as data
center colocation and hosted solution partners, provide services to us and also provide services as a component of our services
delivery to customers. These third parties or others that are a part of our supply chain could also be a source of security risk in
the event of a failure to protect their own products, security systems and infrastructure and we may not be able to control the
manner in which these third parties respond to any security breach. We have privacy and data security policies, practices and
controls in place that are designed to prevent security breaches; however, as newer technologies evolve, as more business is
conducted on line and remotely, and as the portfolio of the service providers we exchange confidential information, software
and/or hardware with expands, we are exposed to increased risks from breaches in security, including those arising from human
error, negligence or mismanagement or from illegal or fraudulent acts, such as cyberattacks. Although we have not experienced
a material security breach to date, we regularly experience malicious attacks and other attempts to gain authorized access to our
systems. The evolving nature of threats to data security, in light of new and sophisticated methods used by criminals and
cyberterrorists, state-sponsored organizations and nation-states, including computer viruses, malware, ransomware, phishing,
misrepresentation, social engineering and forgery, make it increasingly challenging to anticipate and adequately mitigate these
threats should they materialize.
Breaches in security could expose us, our supply chain, our customers or other individuals to significant disruptions and a risk
of public disclosure, loss or misuse of this information. Security breaches could result in legal claims or proceedings, liability or
regulatory penalties under laws protecting the privacy of personal information (including those under the European Union
General Data Protection Regulation and the California Consumer Privacy Act), significant remediation costs as well as the loss
of existing or potential customers and, ultimately, damage to our brand and reputation. While we maintain insurance coverages
that are intended to address certain aspects of data security, such insurance may be insufficient to cover all losses or all types of
claims that may arise. Moreover, media or other reports of perceived vulnerabilities in our network security or perceived lack of
security within our environment, even if inaccurate, could materially adversely impact our reputation and business. The cost
and operational consequences of implementing further data protection measures could also be significant. Such breaches, costs
and consequences could adversely affect our business, results of operations or cash flows.
If we or our third-party service providers fail to provide high-quality services to our customers, our reputation, brand,
business, results of operations or cash flows could be adversely affected.
Our services include professional services, managed services, warranties, configuration services, partner services and telecom
services. Additionally, we deliver and manage mission critical software, systems and network solutions for our customers. We
also offer certain services, such as implementation and installation services and repair services, to our customers through
various third-party service providers engaged to perform these services on our behalf. If we or our third-party service providers
fail to provide high-quality services to our customers or such services result in an unplanned disruption of our customers’
businesses, this could, among other things, result in legal claims and proceedings and liability for us. Moreover, as we expand
our services and solutions business and provide increasingly complex services and solutions, we may be exposed to additional
operational, regulatory and other risks. We also could incur liability for failure to comply with the rules and regulations
applicable to the new services and solutions we provide to our customers. If any of the foregoing were to occur, our reputation
with our customers, our brand and our business, results of operations or cash flows could be adversely affected.
If we lose any of our key personnel, are unable to attract and retain the talent required for our business, our labor costs
significantly increase or if our approach to workforce management is ineffective, our business could be disrupted and our
financial performance could suffer.
Our success is heavily dependent upon our ability to attract, develop, engage and retain key personnel to manage, lead, innovate
and grow our business, including our key executive, management, sales, services and technical coworkers. The proposed
federal vaccinate mandate, along with any other vaccine requirements applicable to our coworkers, and the uncertainty and
unpredictability of the COVID-19 environment, could make it more difficult to attract or retain key personnel.
Our future success will depend to a significant extent on the efforts of our leadership team, as well as the effectiveness of our
succession planning and efforts to develop and promote top talent. Our future success also will depend on our ability to retain
and motivate our customer-facing coworkers, who have been given critical CDW knowledge regarding, and the opportunity to
develop strong relationships with, many of our customers. In addition, as we seek to expand our offerings of value-added
services and solutions, our success will even more heavily depend on attracting and retaining highly skilled technology
specialists and engineers, for whom the market is extremely competitive.
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In order to attract, retain and motivate key personnel in a competitive marketplace, it is important to provide a competitive
compensation package. If our compensation package is not viewed as being competitive, our ability to attract, retain and
motivate key personnel could be adversely affected. Additionally, as minimum wage rates increase or related laws and
regulations change, we have and may need to continue to increase not only the wage rates of our minimum wage coworkers, but
also the wages paid to our other hourly or salaried coworkers.
We have observed an overall tightening and increasingly competitive labor market, in particular with highly skilled technology
specialists and engineers. A sustained labor shortage or increased turnover rates within our coworker base, whether caused by
COVID-19 or as a result of general macroeconomic factors occurring throughout the US economy, could lead to increased
costs, such as increased overtime to meet demand and increased wage rates to attract and retain coworkers, and could adversely
affect our business, results of operations or cash flows. Additionally, if we fail to effectively manage our workforce, we may
need to terminate or reposition coworkers within our Company to eliminate an abundance of or to reconfigure resources, which
could damage our coworker relations and our ability to attract and retain key personnel.
If we are unable to attract, develop, engage and retain key personnel, or if our approach to workforce management is
ineffective, our relationships with our vendor partners and customers and our ability to expand our offerings of value-added
services and solutions could be adversely affected. Moreover, if we are unable to continue to train our sales, services and
technical personnel effectively to meet the rapidly changing technology needs of our customers, the overall quality and
efficiency of such personnel could decrease. Such consequences could adversely affect our business, results of operations or
cash flows.
A natural disaster or other adverse occurrence at one of our primary facilities or a third-party provider location could
damage our business.
If the warehouse and distribution equipment or operations at one of our distribution centers were to be seriously damaged or
disrupted by a natural disaster, which may increase in number or severity as a result of climate change, or other adverse
occurrence, including disruption related to political or social unrest, we could utilize another distribution center or third-party
distributors to ship products to our customers. However, this may not be sufficient to avoid interruptions in our service and may
not enable us to meet all of the needs of our customers and would cause us to incur incremental operating costs. In addition, we
operate numerous facilities which may contain both business-critical data and confidential information of our customers and
third parties, such as data center colocation and hosted solution partners, and third-parties provide services as a component of
our services delivery to customers. A natural disaster or other adverse occurrence at any of our major data storage locations or
third-party provider locations could negatively impact our business, results of operations or cash flows.
Increases in the cost of commercial delivery services or disruptions of those services could materially adversely impact our
business.
We generally ship hardware products to our customers by FedEx, United Parcel Service and other commercial delivery services
and invoice customers for delivery charges. If we are unable to pass on to our customers future increases in the cost of
commercial delivery services (including those that may result from an increase in fuel or personnel costs or a need to use higher
cost delivery channels during periods of increased demand), our profitability could be adversely affected. Additionally, strikes,
inclement weather, natural disasters or other service interruptions by such shippers or periods of increased demand on delivery
services, such as those we have experienced during the COVID-19 pandemic, could materially adversely affect our ability to
deliver or receive products on a timely basis.
We are exposed to accounts receivable and inventory risks.
We extend credit to our customers for a significant portion of our sales. We are subject to the risk that our customers may not
pay for the products they have purchased, may pay at a slower rate than we have historically experienced, or may seek extended
payment terms. This risk is heightened during periods of global or industry-specific economic downturn or uncertainty, during
periods of rising interest rates or, in the case of public sector customers, during periods of budget constraints. Significant
failures of customers to timely pay all amounts due to us could adversely affect our business, results of operations or cash
flows.
We are also exposed to inventory risks as a result of the rapid technological changes that affect the market and pricing for the
products we sell. In addition to drop-ship arrangements with many of our OEMs and wholesale distributors, we seek to
minimize our inventory exposure through a variety of inventory management procedures and policies, including our rapid-turn
inventory model, as well as vendor price protection and product return programs. However, if we were unable to maintain our
rapid-turn inventory model, if there were unforeseen product developments that created more rapid obsolescence or if our
vendor partners were to change their terms and conditions, our inventory risks could increase. We also from time to time take
advantage of cost savings associated with certain opportunistic bulk inventory purchases offered by our vendor partners or we
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may decide to carry high inventory levels of certain products that have limited or no return privileges due to customer demand
or request or to manage supply chain interruptions. If we purchase inventory in anticipation of customer demand that does not
materialize, or if customers reduce or delay orders, and if we were unable to return the inventory to a vendor partner, we would
be exposed to an increased risk of inventory obsolescence.
Achieving the anticipated benefits of the Sirius acquisition remains subject to a number of uncertainties.
On December 1, 2021, the Company completed its acquisition of Sirius (the “Sirius Acquisition”). Risks and uncertainties
associated with the integration of Sirius include, among other things, our ability to retain key personnel and maintain
relationships with customers, suppliers and other third parties. Moreover, achieving the anticipated benefits of the Sirius
Acquisition is subject to a number of uncertainties, including that the anticipated benefits may not be fully realized or may take
longer to realize than expected, that the Sirius Acquisition may not be accretive to the extent anticipated, and that the
Company’s acquisition and integration of Sirius may involve unanticipated liabilities and costs. Failure to achieve the
anticipated benefits of the Sirius Acquisition in the expected timeframe or at all could materially adversely affect our business,
results of operations, cash flows and common stock price.
We could be exposed to additional risks if we continue to make strategic investments or acquisitions or enter into alliances.
We may continue to pursue transactions, including strategic investments, acquisitions or alliances, in an effort to extend or
complement our existing business. These types of transactions involve numerous business risks, including finding suitable
transaction partners and negotiating terms that are acceptable to us, the diversion of management’s attention from other
business concerns, extending our product or service offerings into areas in which we have limited experience, entering into new
geographic markets, the potential loss of key coworkers or business relationships and successfully integrating acquired
businesses. There can be no assurance that the intended benefits of our investments, acquisitions and alliances will be realized,
or that those benefits will offset these numerous risks or other unforeseen factors, any of which could adversely affect our
business, results of operations or cash flows.
In addition, our financial results could be adversely affected by financial adjustments required by generally accepted accounting
principles in the United States of America (“US GAAP”) in connection with these types of transactions, including the Sirius
Acquisition, where significant goodwill or intangible assets are recorded. To the extent the value of goodwill or identifiable
intangible assets becomes impaired, we may be required to incur material charges relating to the impairment of those assets.
Our future operating results may fluctuate significantly, which may result in volatility in the market price of our stock and
could impact our ability to operate our business effectively.
We may experience significant variations in our future quarterly results of operations. These fluctuations may cause the market
price of our common stock to be volatile and may result from many factors, including the condition of the technology industry
in general, shifts in demand and pricing for hardware, software and services, the introduction of new products or upgrades.
Further, if our customers’ businesses are adversely affected by the impact of COVID-19, they may delay or reduce purchases
from us, which could adversely affect our results of operations.
Our operating results are also highly dependent on Gross profit as a percentage of Net sales. Our Gross profit percentage
fluctuates due to numerous factors, some of which may be outside of our control, including general macroeconomic conditions,
such as inflation; pricing pressures; changes in product costs from our vendor partners; the availability of price protection,
purchase discounts and incentive programs from our vendor partners; changes in product, order size and customer mix; the risk
of some items in our inventory becoming obsolete; increases in product and delivery costs that we cannot pass on to customers;
and general market and competitive conditions.
In addition, our cost structure is based, in part, on anticipated sales and gross margins. Therefore, we may not be able to adjust
our cost structure quickly enough to compensate for any unexpected sales or gross margin shortfall, and any such inability
could have an adverse effect on our business, results of operations or cash flows.
Fluctuations in foreign currency have an effect on our reported results of operations.
Our exposure to fluctuations in foreign currency rates results primarily from the translation exposure associated with the
preparation of our Consolidated Financial Statements. While our Consolidated Financial Statements are reported in US dollars,
the financial statements of our subsidiaries outside the US are prepared using the local currency as the functional currency and
translated into US dollars. As a result, fluctuations in the exchange rate of the US dollar relative to the local currencies of our
international subsidiaries, particularly the British pound and the Canadian dollar, could cause material fluctuations in our
reported results of operations. We also have foreign currency exposure to the extent sales and purchases are not denominated in
a subsidiary’s functional currency, which could have an adverse effect on our business, results of operations or cash flows.
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Macroeconomic and Industry Risks
Global and regional economic and political conditions may have an adverse impact on our business.
Weak or unstable economic and political conditions generally, sustained uncertainty about global economic and political
conditions, government spending cuts and the impact of new government policies (including the introduction of new or
increased taxes, the imposition of minimum taxes or new or increased limitations on deductions, credits or other tax benefits),
or a tightening of credit markets, including as a result of the COVID-19 pandemic, could cause our customers and potential
customers to postpone or reduce spending on technology products or services or put downward pressure on prices, which could
have an adverse effect on our business, results of operations or cash flows. For example, there continues to be uncertainty
regarding the economic and other impacts of the UK’s exit from the European Union (“EU”) in 2020, referred to as “Brexit”.
Potential adverse consequences of Brexit and the uncertainties around the UK and EU’s relationship include global market
uncertainty, volatility in currency exchange rates, additional costs and operational burdens associated with increased operational
restrictions on imports and exports between the UK and other countries, potential adverse effects on the mobility of personnel
and potentially increased regulatory complexities, each of which could have a negative impact on our business, financial
condition or results of operations. We have established a presence in the Netherlands to help address future developments, as
needed, for Brexit, which could add complexity to our European operations as well as result in higher costs associated with
serving our customers.
The interruption of the flow of products from suppliers could disrupt our supply chain.
Our business depends on the timely supply of products in order to meet the demands of our customers. Manufacturing
interruptions or delays, including as a result of the financial instability or bankruptcy of manufacturers, significant labor
disputes such as strikes, natural disasters (which may increase in number or severity as a result of climate change), political or
social unrest, pandemics (such as the COVID-19 pandemic) or other public health crises, or other adverse occurrences affecting
any of our suppliers’ facilities, could disrupt our supply chain. We have experienced and could continue to experience product
constraints due to the failure of suppliers to accurately forecast customer demand, or to manufacture sufficient quantities of
product to meet customer demand (including as a result of shortages of product components), among other reasons.
Additionally, the relocation of key distributors utilized in our purchasing model could increase our need for, and the cost of,
working capital and have an adverse effect on our business, results of operations or cash flows.
Moreover, supply chain disruptions during the COVID-19 pandemic have caused and could continue to cause us to experience
more volatility in our level of inventory and delays in completion of orders and installations for our customers.
Our supply chain is also exposed to risks related to international operations. While we purchase our products primarily in the
markets we serve (for example, products for US customers are sourced in the US), our vendor partners manufacture or purchase
a significant portion of the products we sell outside of the US, primarily in Asia. Political, social or economic instability in
Asia, or in other regions in which our vendor partners purchase or manufacture the products we sell, could cause disruptions in
trade, including exports to the US. Other events related to international operations that could cause disruptions to our supply
chain include:
• the imposition of additional trade law provisions or regulations, including the adoption or expansion of trade
restrictions;
• the imposition of additional duties, tariffs and other charges on imports and exports, including any resulting retaliatory
tariffs or charges and any reductions in the production of products subject to such tariffs and charges;
• foreign currency fluctuations; and
• restrictions on the transfer of funds.
We cannot predict whether the countries in which the products we sell, or any components of those products, are purchased or
manufactured will be subject to new or additional trade restrictions or sanctions imposed by the US or foreign governments,
including the likelihood, type or effect of any such restrictions. Trade restrictions, including new or increased tariffs or quotas,
embargoes, sanctions, safeguards and customs restrictions against the products we sell, could increase the cost or reduce the
supply of product available to us and adversely affect our business, results of operations or cash flows. In addition, our exports
are subject to regulations, some of which may be inconsistent, and noncompliance with these requirements could have a
negative effect on our business, results of operations or cash flows.
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Our financial performance could be adversely affected by decreases in spending on technology products and services by our
public and private sector customers due to, among other things, customer spending decisions and government spending
policies.
Our sales are impacted by customer spending decisions on technology, including refresh decisions, customer initiatives that
drive technology spending and customer budget priorities. Our sales to our public sector customers, and our other customers
that do business with our public sector customers in particular, are impacted by government spending policies, budget priorities
and revenue levels. An adverse change in government spending policies (such as budget cuts or limitations or temporary
shutdowns of government operations), shifts in budget priorities or reductions in revenue levels, could cause our impacted
public sector customers or our other customers that do business with impacted public sector customers to reduce or delay their
purchases or to terminate or not renew their contracts with us, which could adversely affect our business, results of operations
or cash flows. Additionally, such adverse change in government spending policies, shifts in budget priorities or reductions in
revenue levels could impact cash collections from contracts with our impacted public sector customers or other customers that
do business with impacted public sector customers, which could adversely affect our business, results of operations or cash
flows.
Legal and Regulatory Risks
The failure to comply with our public sector contracts or applicable laws and regulations could result in, among other
things, termination, fines or other liabilities, and changes in procurement regulations could adversely impact our business,
results of operations or cash flows.
Revenues from our public sector customers are derived from sales to governmental entities, educational institutions and
healthcare customers through various contracts and open market sales of products and services. Sales to public sector customers
are highly regulated and present risks and challenges not present in private commercial agreements. Noncompliance with
contract provisions, government procurement regulations or other applicable laws or regulations (including the False Claims
Act, the Medicare and Medicaid Anti-Kickback Statute or similar laws of the jurisdictions for our business activities outside of
the US) or security clearance and confidentiality requirements could result in civil, criminal and administrative liability,
including substantial monetary fines or damages, termination of government contracts or other public sector customer contracts,
and suspension, debarment or ineligibility from doing business with governmental entities or other customers in the public
sector. In addition, contracts in the public sector are generally terminable at any time for convenience of the contracting agency
or group purchasing organization (“GPO”) or upon default and public sector contracts may be subject to periodic funding
approval, rejections or delays, which could adversely impact public sector demand for our products and services. Furthermore,
our inability to enter into or retain contracts with GPOs may threaten our ability to sell to customers in those GPOs and compete
effectively. The effect of any of these possible actions or failures could adversely affect our business, results of operations or
cash flows. In addition, the adoption of new or modified procurement regulations and other requirements may increase our
compliance costs and reduce our gross margins, which could have a negative effect on our business, results of operations or
cash flows.
We are exposed to risks from legal proceedings and audits, including intellectual property infringement claims, which may
result in substantial costs and expenses or interruption of our normal business operations.
We are party to various legal proceedings that arise in the ordinary course of our business, which include commercial,
employment, tort and other litigation.
We are also subject to intellectual property infringement claims against us in the ordinary course of our business, either because
of the products and services we sell or the business systems and processes we use to sell such products and services, in the form
of cease-and-desist letters, licensing inquiries, lawsuits and other communications and demands. In our industry, such
intellectual property claims have become more frequent as the complexity of technological products and the intensity of
competition in our industry have increased. Increasingly, many of these assertions are brought by non-practicing entities whose
principal business model is to secure patent licensing revenue, but we may also be subject to demands from inventors,
competitors or other patent holders who may seek licensing revenue, lost profits and/or an injunction preventing us from
engaging in certain activities, including selling certain products or services.
In addition, we are subject to proceedings, investigations and audits by federal, state, international, national, provincial and
local authorities, including as a result of our significant sales to governmental entities. For example, a subsidiary of the
Company received a Civil Investigative Demand dated September 20, 2021 from the US Department of Justice (“DOJ”) in
connection with a False Claims Act investigation. The DOJ has requested information related to teaming agreements with
OEMs.
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We also are subject to audits by various partners, group purchasing organizations and customers, including government
agencies, relating to purchases and sales under various contracts. In addition, we are subject to indemnification claims under
various contracts.
Current and future litigation, infringement claims, governmental proceedings and investigations, audits or indemnification
claims that we face may result in substantial costs and expenses and significantly divert the attention of our management
regardless of the outcome. In addition, these matters could lead to increased costs or interruptions of our normal business
operations. Litigation, infringement claims, governmental proceedings and investigations, audits or indemnification claims
involve uncertainties and the eventual outcome of any such matter could adversely affect our business, results of operations or
cash flows.
Failure to comply with complex and evolving laws and regulations applicable to our operations or failure to meet
stakeholder expectations on environmental sustainability and corporate responsibility matters could adversely affect our
business, results of operations or cash flows.
Our global operations span a variety of legal regimes, subjecting us to numerous complex, diverse, evolving and at times
potentially inconsistent laws and regulations in a number of areas, including labor and employment, advertising, e-commerce,
tax, trade, import and export controls, economic and trade sanctions, anti-corruption, data privacy and security requirements,
competition, climate, environmental and health and safety. The evaluation of and compliance with these laws, regulations and
similar requirements may be onerous and expensive, and may have other adverse impacts on our business, results of operations
or cash flows, the risk of which will be heightened as we expand the products and services we offer, expand into new markets
and channels and expand internationally. For example, we may be subject to increased costs and use of operational resources
associated with complying with any new climate-related laws and regulations. Additionally, the hardware, software and
services we offer increasingly utilize new and evolving technologies such as artificial intelligence (“AI”), which presents risks
and challenges that could result in legal liability.
We have implemented policies and procedures designed to help ensure compliance with applicable laws and regulations, but
there can be no guarantee against coworkers, contractors or agents violating such laws and regulations or our policies and
procedures. Additionally, there is increased focus by stakeholders on environmental sustainability and corporate responsibility
matters, including climate change response, packaging and waste reduction, energy consumption, and diversity, equity and
inclusion. Our disclosure on these matters and our failure, or perceived failure, to meet our commitments or otherwise
effectively address these matters may erode customer trust or confidence, particularly if they receive considerable publicity or
result in litigation, and could have a negative impact on our business.
As a public company, we also are subject to increasingly complex public disclosure, corporate governance and accounting
requirements that increase compliance costs and require significant management focus.
Risks Related to Our Indebtedness
Our level of indebtedness could adversely affect our business.
As of December 31, 2021, we had $6.9 billion of total debt outstanding and $448 million of obligations outstanding under our
inventory financing agreements, and the ability to borrow an additional $1.0 billion under our senior unsecured revolving loan
facility (the “Revolving Loan Facility”). Our level of indebtedness could have important consequences, including the following:
• making it more difficult for us to satisfy our obligations with respect to our indebtedness;
• requiring us to dedicate a substantial portion of our cash flow from operations to debt service payments on our and our
subsidiaries’ debt, which reduces the funds available for working capital, capital expenditures, acquisitions and other
general corporate purposes;
• requiring us to comply with restrictive covenants in our senior credit facilities and indentures, which limit the manner
in which we conduct our business;
• making it more difficult for us to obtain vendor financing from our vendor partners, including original equipment
manufacturers and software publishers;
• limiting our flexibility in planning for, or reacting to, changes in the industry in which we operate;
• placing us at a competitive disadvantage compared to any of our less-leveraged competitors;
• increasing our vulnerability to both general and industry-specific adverse economic conditions; and
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• limiting our ability to obtain additional debt or equity financing to fund future working capital, capital expenditures,
acquisitions or other general corporate requirements and increasing our cost of borrowing.
Restrictive covenants under our senior credit facilities and, to a lesser degree, our indentures may adversely affect our
operations and liquidity.
Our senior credit facilities and, to a lesser degree, our indentures contain, and any future indebtedness of ours may contain,
various covenants that limit our ability to, among other things:
• incur or guarantee additional debt;
• receive dividends or other payments from our subsidiaries;
• enter into transactions with affiliates;
• pledge our assets as collateral;
• merge or consolidate with other companies or transfer all or substantially all of our assets; and
• engage in sale leaseback transactions.
As a result of these covenants, we are limited in the manner in which we conduct our business and we may be unable to engage
in favorable business activities or finance future operations or capital needs. A breach of any of these covenants or any of the
other restrictive covenants would result in a default under our senior credit facilities. Upon the occurrence of an event of default
under our senior credit facilities, the lenders:
• will not be required to lend any additional amounts to us;
• could elect to declare all borrowings outstanding thereunder, together with accrued and unpaid interest and fees, to be
due and payable; or
• could require us to apply all of our available cash to repay these borrowings.
The acceleration of amounts outstanding under our senior credit facilities would likely trigger an event of default under our
existing indentures.
If the lenders under our senior credit facilities accelerate the repayment of borrowings, we may not have sufficient assets to
repay our senior credit facilities and our other indebtedness or the ability to borrow sufficient funds to refinance such
indebtedness. Even if we were able to obtain new financing, it may not be on commercially reasonable terms, or terms that are
acceptable to us.
We will be required to generate sufficient cash to service our indebtedness and, if not successful, we may be forced to take
other actions to satisfy our obligations under our indebtedness.
Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial and operating
performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other
factors beyond our control. Our outstanding long-term debt will impose significant cash interest payment obligations on us and,
accordingly, we will have to generate significant cash flow from operating activities to fund our debt service obligations. We
cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the
principal, premium, if any, and interest on our indebtedness. See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital Resources” included elsewhere in this report.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay
capital expenditures, sell assets or operations, seek additional debt or equity capital, restructure or refinance our indebtedness,
or revise or delay our strategic plan. We cannot assure you that we would be able to take any of these actions on terms that are
favorable to us or at all, that these actions would be successful and permit us to meet our scheduled debt service obligations or
satisfy our capital requirements, or that these actions would be permitted under the terms of our existing or future debt
agreements, including our senior credit facilities and indentures. In the absence of such operating results and resources, we
could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt
service and other obligations. We may not be able to consummate those dispositions or to obtain the proceeds which we could
realize from them and these proceeds may not be adequate to meet any debt service obligations then due.
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In addition, major debt rating agencies regularly evaluate our debt based on a number of factors. We may not be able to
maintain our existing ratings, and the failure to do so could increase the cost of servicing certain of our existing indebtedness,
and make it more difficult to raise debt financing on favorable terms in the future.
If we cannot make scheduled payments on our debt, we will be in default and, as a result:
• our debt holders could declare all outstanding principal and interest to be due and payable;
• the lenders under our Revolving Loan Facility could terminate their commitments to lend us money; and
• we could be forced into bankruptcy or liquidation.
We and our subsidiaries may be able to incur substantially more debt, including secured debt. This could further increase
the risks associated with our leverage.
We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of our senior credit
facilities and indentures do not fully prohibit us or our subsidiaries from doing so. To the extent that we incur additional
indebtedness, the risks associated with our level of indebtedness described above, including our possible inability to service our
debt, will increase. As of December 31, 2021, we had $1.0 billion available for additional borrowing under our Revolving Loan
Facility.
Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase
significantly.
Certain of our borrowings, primarily borrowings under our senior credit facilities, are at variable rates of interest and expose us
to interest rate risk. As of December 31, 2021, we had $1.7 billion of variable rate debt outstanding. If interest rates increase,
our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the
same, and our net income would decrease. Although we have entered into interest rate cap agreements on our term loan facility
to reduce interest rate volatility, we cannot assure you we will be able to enter into interest rate cap agreements in the future on
acceptable terms or that such caps or the caps we have in place now will be effective.
The London Inter-bank Offered Rate (“LIBOR”) is being discontinued as a floating rate benchmark, which may cause
interest rates under our current or future debt agreements to perform differently than in the past or cause other
unanticipated consequences.
Certain of our credit facilities, including our term loan facility and our Revolving Loan Facility, have variable interest rates
using LIBOR as a benchmark rate, and we have entered into interest rate cap agreements with respect to the term loan
facility that are based on LIBOR. As of December 31, 2021, $1.7 billion of our total debt outstanding bears interest at variable
interest rates using LIBOR as a benchmark rate. The LIBOR and certain other interest “benchmarks” are subject to regulatory
guidance and/or reform that could cause interest rates under our current or future debt agreements to perform differently than in
the past or cause other unanticipated consequences. The United Kingdom’s Financial Conduct Authority, which regulates the
LIBOR administrator, previously announced that all LIBOR settings will either cease to be provided or no longer be
representative (i) after December 31, 2021, in the case of the one-week and two-month US dollar LIBOR tenors and all tenors
of non-US dollar LIBOR, and (ii) after June 30, 2023, in the case of the overnight and one-, three-, six-, and 12-month US
dollar LIBOR tenors. Additionally, the US Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a
steering committee comprised of large US financial institutions, announced the replacement of US dollar LIBOR with a new
index calculated by short-term repurchase agreements, backed by US Treasury securities, called the Secured Overnight
Financing Rate (“SOFR”). SOFR has a limited history, having been first published in April 2018. The future performance of
SOFR, and SOFR-based reference rates, cannot be predicted based on SOFR’s history or otherwise. Future levels of SOFR may
bear little or no relation to historical levels of SOFR, LIBOR or other rates. If LIBOR ceases to exist, interest rates on our
current or future debt obligations and hedging instruments may be adversely affected and we may need to renegotiate the
agreements governing such obligations or instruments. Although the agreements governing our senior credit facilities contain
provisions for transition to new “benchmark” rates if LIBOR is discontinued or cannot be determined, any new “benchmark”
may perform differently than LIBOR or cause other unanticipated consequences, which could adversely affect our interest
expense, related debt obligations and our interest rate cap agreements.
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20
Risks Related to Ownership of Our Common Stock
Our common stock price may be volatile and may decline regardless of our operating performance, and holders of our
common stock could lose a significant portion of their investment.
The market price for our common stock may be volatile. Our stockholders may not be able to resell their shares of common
stock at or above the price at which they purchased such shares, due to fluctuations in the market price of our common stock,
which may be caused by a number of factors, many of which we cannot control, including the risk factors described in this
Annual Report on Form 10-K and the following:
• changes in financial estimates by any securities analysts who follow our common stock, our failure to meet these
estimates or failure of securities analysts to maintain coverage of our common stock;
• downgrades by any securities analysts who follow our common stock;
• future sales of our common stock by our officers, directors and significant stockholders;
• market conditions or trends in our industry or the economy as a whole;
• investors’ perceptions of our prospects;
• announcements by us or our competitors of significant contracts, acquisitions, joint ventures or capital commitments;
and
• changes in key personnel.
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect
the market prices of equity securities of many companies, including companies in our industry. In the past, securities class
action litigation has followed periods of market volatility. If we were involved in securities litigation, we could incur substantial
costs, and our resources and the attention of management could be diverted from our business.
In the future, we may also issue our securities in connection with investments or acquisitions. The number of shares of our
common stock issued in connection with an investment or acquisition could constitute a material portion of our then-
outstanding shares of our common stock and depress our stock price.
Anti-takeover provisions in our charter documents and Delaware law might discourage or delay acquisition attempts for us
that may be considered favorable.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the
acquisition of the Company more difficult without the approval of our Board of Directors. These provisions:
• authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which
may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other
rights or preferences superior to the rights of the holders of common stock;
• generally prohibit stockholder action by written consent, requiring all stockholder actions be taken at a meeting of our
stockholders;
• provide that special meetings of the stockholders can only be called by or at the direction of our Board of Directors
pursuant to a written resolution adopted by the affirmative vote of the majority of the total number of directors that the
Company would have if there were no vacancies;
• establish advance notice requirements for nominations for elections to our Board of Directors or for proposing matters
that can be acted upon by stockholders at stockholder meetings; and
• provide that our Board of Directors is expressly authorized to make, alter or repeal our amended and restated bylaws.
In addition, we are subject to Section 203 of the Delaware General Corporation Law, which will prevent us from engaging in a
business combination with a person who acquires at least 15% of our common stock for a period of three years from the date
such person acquired such common stock, unless Board or stockholder approval is obtained prior to the acquisition. These anti-
takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a
change in control of the Company, even if doing so would benefit our stockholders. These provisions could also discourage
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21
proxy contests and make it more difficult for our stockholders to elect directors of their choosing and to cause us to take other
corporate actions our stockholders desire.
We cannot assure you that we will continue to pay dividends on our common stock or repurchase any of our common stock
under our share repurchase program, and our indebtedness and certain tax considerations could limit our ability to
continue to pay dividends on, or make share repurchases of, our common stock. If we do not continue to pay dividends, you
may not receive any return on investment unless you are able to sell your common stock for a price greater than your
purchase price.
We expect to continue to pay a cash dividend on our common stock. However, any determination to pay dividends in the future
will be at the discretion of our Board of Directors. Any determination to pay dividends on, or repurchase, shares of our common
stock in the future will depend upon our results of operations, financial condition, business prospects, capital requirements,
contractual restrictions, any potential indebtedness we may incur, our target leverage ratio, restrictions imposed by applicable
law, tax considerations and other factors our Board of Directors deems relevant. In addition, our ability to pay dividends on, or
repurchase, shares of our common stock will be limited by restrictions on our ability to pay dividends or make distributions to
our stockholders and on the ability of our subsidiaries to pay dividends or make distributions to us, in each case, under the terms
of our current and any future agreements governing our indebtedness. There can be no assurance that we will continue to pay a
dividend at the current rate or at all or that we will continue to repurchase shares of our common stock. If we do not pay
dividends in the future, realization of a gain on your investment will depend entirely on the appreciation of the price of our
common stock, which may never occur.
We are a holding company and rely on dividends, distributions and other payments, advances and transfers of funds from
our subsidiaries to meet our obligations.
We are a holding company that does not conduct any business operations of our own. As a result, we are largely dependent
upon cash dividends and distributions and other transfers from our subsidiaries to meet our obligations. The agreements
governing the indebtedness of our subsidiaries impose restrictions on our subsidiaries’ ability to pay dividends or other
distributions to us. The deterioration of the earnings from, or other available assets of, our subsidiaries for any reason could also
limit or impair their ability to pay dividends or other distributions to us.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
As of December 31, 2021, we owned or leased a total of 2.6 million square feet of space, primarily in the US, UK and Canada.
We own two properties: a 513,000 square foot distribution center in North Las Vegas, Nevada, and a combined office and a
442,000 square foot distribution center in Vernon Hills, Illinois. In addition, we conduct sales, services and administrative
activities in various locations primarily in the US, UK and Canada.
We believe our facilities are well maintained, suitable for our business and occupy sufficient space to meet our operating needs.
As part of our normal business, we regularly evaluate sales center performance and site suitability. Leases covering our
currently occupied leased properties expire at varying dates, all within the next 15 years.
We anticipate no difficulty in retaining occupancy through lease renewals, month-to-month occupancy or replacing the leased
properties with equivalent properties. We believe that suitable additional or substitute leased properties will be available as
required.
Item 3. Legal Proceedings
We are party to various legal proceedings that arise in the ordinary course of our business, which include commercial,
intellectual property, employment, tort and other litigation matters. For additional information regarding legal proceedings,
refer to Note 16 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements.
Item 4. Mine Safety Disclosures
Not applicable.
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22
Information about our Executive Officers
The following table lists the name, age as of February 28, 2022 and positions of each executive officer of the Company.
Name Age Position
Christine A. Leahy 57 President and Chief Executive Officer and member of our Board of Directors since January 2019;
Chief Revenue Officer from July 2017 to December 2018; Senior Vice President - International,
Chief Legal Officer, and Corporate Secretary from May 2016 to July 2017; Senior Vice President,
General Counsel and Corporate Secretary from January 2007 to May 2016.
Sona Chawla 54 Chief Growth and Innovation Officer since January 2020; President, Kohl’s Corporation (an
omnichannel retailer) from May 2018 to October 2019 and Chief Operating Officer from November
2015 to May 2018.
Elizabeth H. Connelly 57 Chief Human Resources Officer and Senior Vice President, Coworker Services since December
2018; Managing Director and Head, Commercial Bank Healthcare, Higher Education and Not-for-
Profit Banking at J.P. Morgan Chase & Company (a global financial services firm) from March
2012 to December 2018.
Christina M. Corley 54 Chief Commercial and Operating Officer since January 2020; Chief Operating Officer from January
2019 to January 2020; Senior Vice President, Commercial and International Markets from July 2017
to December 2018; Senior Vice President, Corporate Sales from September 2011 to July 2017.
Albert J. Miralles 52 Senior Vice President and Chief Financial Officer since September 2021; Executive Vice President
and Chief Financial Officer, CNA Financial Corporation (a commercial property and casualty
insurance company) from February 2020 to September 2021; President, CNA Warranty from
October 2019 to September 2021; Executive Vice President and Chief Risk Officer of the CNA
Insurance Companies from January 2018 to October 2019; President, Long-Term Care of the CNA
Insurance Companies from March 2014 to December 2017.
Frederick J. Kulevich 56 Senior Vice President, General Counsel and Corporate Secretary since October 2017; Vice President
and Deputy General Counsel from May 2016 to October 2017; Vice President and Assistant General
Counsel from May 2014 to May 2016; Senior Director, Ethics and Compliance from July 2006 to
May 2014.
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23
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
Our common stock has been listed on the Nasdaq Global Select Market since June 27, 2013 under the symbol “CDW.”
Holders
As of February 24, 2022, there were 7 holders of record of our common stock. The number of beneficial stockholders is
substantially greater than the number of holders of record because a portion of our common stock is held through brokerage
firms.
Dividends
On February 9, 2022, we announced that our Board of Directors declared a quarterly cash dividend on our common stock of
$0.50 per share. The dividend will be paid on March 10, 2022 to all stockholders of record as of the close of business on
February 25, 2022.
We expect to continue to pay quarterly cash dividends on our common stock in the future, but such payments remain at the
discretion of our Board of Directors and will depend upon our results of operations, financial condition, business prospects,
capital requirements, contractual restrictions, any potential indebtedness we may incur, restrictions imposed by applicable law,
tax considerations and other factors that our Board of Directors deems relevant. In addition, our ability to pay dividends on our
common stock will be limited by restrictions on our ability to pay dividends or make distributions to our stockholders and on
the ability of our subsidiaries to pay dividends or make distributions to us, in each case, under the terms of our current and any
future agreements governing our indebtedness. For additional information on our cash resources and needs and restrictions on
our ability to pay dividends, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Liquidity and Capital Resources” included elsewhere in this report. For additional information on restrictions on our ability to
pay dividends, see Note 9 (Debt) to the accompanying Consolidated Financial Statements.
Issuer Purchases of Equity Securities
On February 10, 2021, we announced that our Board of Directors authorized a $1.25 billion increase to our share repurchase
program under which we may repurchase shares of our common stock in the open market through privately negotiated or other
transactions, depending on share price, market conditions and other factors.
Information relating to the Company’s purchases of its common stock during the quarter ended December 31, 2021 is as
follows:
Period
Total Number of
Shares Purchased
(in millions)
Average Price Paid per
Share
Total Number of
Shares Purchased as
Part of a Publicly
Announced Program
(in millions)
Maximum Dollar
Value of Shares that
May Yet be Purchased
Under the Program
(1)
(in millions)
October 1 through October 31, 2021 0.6 $ 182.78 0.6 $ 292.4
November 1 through November 30, 2021 0.6 $ 191.15 0.6 $ 182.3
December 1 through December 31, 2021 0.5 $ 193.61 0.5 $ 87.6
Total 1.7 1.7
(1) The amounts presented in this column are the remaining total authorized value to be spent after each month’s
repurchases.
Cumulative Total Shareholder Return
The information contained in this Cumulative Total Shareholder Return section shall not be deemed to be “soliciting material”
or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities
Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into a document filed under the
Securities Act of 1933 or the Securities Exchange Act of 1934.
The following graph compares the cumulative total shareholder return, calculated on a dividend reinvested basis, on $100.00
invested at the closing of the market on December 31, 2016 through and including the market close on December 31, 2021,
with the cumulative total return for the same time period of the same amount invested in the S&P 500 Index and a peer group
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24
index. Our peer group index for 2021 consists of the following companies: Accenture plc, Arrow Electronics, Inc., Avnet, Inc.,
Best Buy Company, Inc., CGI Group Inc., Cognizant Technology Solutions Corporation, DXC Technology Company, Flex
Ltd., Genuine Parts Company, Henry Schein, Inc., Hewlett Packard Enterprise Company, Insight Enterprises, Inc., Jabil, Inc.,
LKQ Corporation, TD SYNNEX Corporation, W.W. Grainger, Inc. and Wesco International, Inc. This peer group was selected
based on a review of publicly available information about these companies and our determination that they met one or more of
the following criteria: (i) similar size in terms of revenue and/or enterprise value (one-third to three times our revenue or
enterprise value); (ii) operates in a business-to-business distribution environment; (iii) members of the technology industry;
(iv) similar customers (i.e., business, government, healthcare, and education); (v) companies that provide services and/or
solutions; (vi) similar margins; (vii) comparable percentage of international sales; (viii) frequently identified as a peer by the
other peer companies or Institutional Shareholder Services Inc.; or (ix) identified by the Company as a competitor.
The cumulative total shareholder returns over the indicated period are based on historical data and should not be considered
indicative of future shareholder returns.
Cumulative Total Shareholder Return
CDW Corp S&P 500 Index CDW Peers
12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21
$0
$100
$200
$300
$400
$500
December 31,
2016
December 31,
2017
December 31,
2018
December 31,
2019
December 31,
2020
December 31,
2021
CDW Corp $ 100 $ 135 $ 159 $ 284 $ 265 $ 416
S&P 500 Index $ 100 $ 119 $ 112 $ 144 $ 168 $ 213
CDW Peers $ 100 $ 117 $ 100 $ 133 $ 146 $ 196
Recent Sales of Unregistered Securities
None.
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25
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless otherwise indicated or the context otherwise requires, as used in this “Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” the terms “we,” “us,” “the Company,” “our,” “CDW” and similar terms
refer to CDW Corporation and its subsidiaries. “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” should be read in conjunction with the Consolidated Financial Statements and the related notes included
elsewhere in this report. This discussion contains forward-looking statements that are subject to numerous risks and
uncertainties. Actual results may differ materially from those contained in any forward-looking statements. See “Forward-
Looking Statements” above.
Overview
CDW Corporation, a Fortune 500 company and member of the S&P 500 Index, is a leading multi-brand provider of information
technology (“IT”) solutions to small, medium and large business, government, education and healthcare customers in the US,
the UK and Canada. Our broad array of offerings ranges from discrete hardware and software products to integrated IT
solutions and services that include on-premise, hybrid and cloud capabilities across hybrid infrastructure, digital experience and
security.
We are vendor, technology, and consumption model “agnostic”, with a solutions portfolio including more than 100,000
products and services from more than 1,000 leading and emerging brands. Our solutions are delivered in physical, virtual and
cloud-based environments through approximately 9,900 customer-facing coworkers, including sellers, highly-skilled
technology specialists and advanced service delivery engineers. We are a leading sales channel partner for many original
equipment manufacturers (“OEMs”), software publishers and cloud providers (collectively, our “vendor partners”), whose
products we sell or include in the solutions we offer. We provide our vendor partners with a cost-effective way to reach
customers and deliver a consistent brand experience through our established end-market coverage, technical expertise and
extensive customer access.
On December 1, 2021, we completed the acquisition of Sirius Computer Solutions, Inc. (“Sirius”). The aggregate consideration
paid, net of cash acquired, at the closing of the acquisition was approximately $2.4 billion, which is subject to the finalization of
customary closing adjustments. Sirius is a leading provider of secure, mission-critical technology-based solutions and is one of
the largest IT solutions integrators in the United States, leveraging its services-led approach, broad portfolio of hybrid
infrastructure solutions, and deep technical expertise of its 2,600 coworkers to support corporate and public customers. This
strategic acquisition will enhance our breadth and depth of services and solutions offerings.
We have three reportable segments, Corporate, Small Business and Public. Our Corporate segment primarily serves US private
sector business customers with more than 250 employees. Our Small Business segment primarily serves US private sector
business customers with up to 250 employees. Our Public segment is comprised of government agencies and education and
healthcare institutions in the US. We also have two other operating segments: CDW UK and CDW Canada, each of which do
not meet the reportable segment quantitative thresholds and, accordingly, are included in an all other category (“Other”). The
financial results of Sirius have been included in our Consolidated Financial Statements and the results of our Corporate, Small
Business and Public segments since the date of the acquisition.
We may sell all or only select products that our vendor partners offer. Each vendor partner agreement provides for specific
terms and conditions, which may include one or more of the following: product return privileges, price protection policies,
purchase discounts and vendor incentive programs, such as purchase or sales rebates and cooperative advertising
reimbursements. We also resell software for major software publishers. Our agreements with software publishers allow the end-
user customer to acquire software or licensed products and services. In addition to helping our customers determine the best
software solutions for their needs, we help them manage their software agreements, including warranties and renewals. A
significant portion of our advertising and marketing expenses are reimbursed through cooperative advertising programs with
our vendor partners. These programs are at the discretion of our vendor partners and are typically tied to sales or other
commitments to be met by us within a specified period of time.
For a discussion of results for the year ended December 31, 2020, see “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2020,
filed with the Securities and Exchange Commission on February 26, 2021.
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27
Trends and Key Factors Affecting our Financial Performance
We believe the following key factors may have a meaningful impact on our business performance, influencing our ability to
generate sales and achieve our targeted financial and operating results:
• General economic conditions are a key factor affecting our results as they impact our customers’ willingness to spend
on information technology. This is particularly the case for our Corporate and Small Business customers, as their
purchases tend to reflect confidence in their business prospects, which are driven by their discrete perceptions of
business and general economic conditions. Additionally, changes in trade policy and product constraints from
suppliers could have an adverse impact on our business.
• The global spread of the novel coronavirus (“COVID-19”) pandemic continues to create macroeconomic uncertainty,
volatility and disruption, including supply constraints. The supply constraints are being caused by component
availability and labor and logistical disruptions, resulting in extended lead times, unpredictability and higher costs. In
2021, customer top priorities have been digital transformation, security, hybrid and cloud solutions, client devices, and
preparing for workers to return to the office and enhancing remote enablement capabilities as hybrid environments
become the future work model. We have orchestrated solutions by leveraging client devices, accessories, collaboration
tools, security, software and hybrid and cloud offerings to help customers build these capabilities and achieve their
objectives.
• Changes in spending policies, budget priorities and funding levels, including current and future stimulus packages, are
key factors influencing the purchasing levels of Government, Healthcare and Education customers. In 2021, Education
customers continued to prioritize investments towards equity and access for all students and enhancing the in-
classroom and hybrid experiences. In addition, Healthcare customers resumed projects that were paused during the
pandemic as budget certainty improved as more patients returned to elective procedures. Government customers
focused on multiyear budget planning and had contracting delays in several large contracts. As the duration and
ongoing economic impacts of the COVID-19 pandemic remain uncertain, current and future budget priorities and
funding levels for Government, Healthcare and Education customers may be adversely affected.
• Technology trends drive customer purchasing behaviors in the market. Current technology trends are focused on
delivering greater flexibility and efficiency, as well as designing IT securely. These trends are driving customer
adoption of solutions such as those delivered via cloud, software defined architectures and hybrid on-premise and off-
premise combinations, as well as the evolution of the IT consumption model to more “as a service” offerings,
including Device as a Service and managed services. Technology trends could also change as customers consider the
impact of the COVID-19 pandemic on their operations.
Key Business Metrics
We monitor a number of financial and non-financial measures and ratios on a regular basis in order to track the progress of our
business and make adjustments as necessary. We believe that the most important of these measures and ratios include average
daily sales, gross margin, operating margin, Net income, Non-GAAP operating income, Non-GAAP operating income margin,
Non-GAAP income before income taxes, Non-GAAP net income, Net sales growth on a constant currency basis, Net income
per diluted share, Non-GAAP net income per diluted share, free cash flow, return on working capital, Cash and cash
equivalents, net working capital, cash conversion cycle and debt levels including available credit. These measures and ratios are
closely monitored by management, so that actions can be taken, as necessary, in order to achieve set standards and objectives.
In this section, we discuss Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP income before
income taxes, Non-GAAP net income and Net sales growth on a constant currency basis, which are non-GAAP financial
measures.
We believe these measures provide analysts, investors and management with helpful information regarding the underlying
operating performance of our business, as they remove the impact of items that management believes are not reflective of
underlying operating performance. Management uses these measures to evaluate period-over-period performance as
management believes they provide a more comparable measure of the underlying business. Certain non-GAAP financial
measures are also used to determine certain components of performance-based compensation. For the definitions of Non-GAAP
operating income, Non-GAAP operating income margin, Non-GAAP income before income taxes, Non-GAAP net income and
Net sales growth on a constant currency basis and reconciliations to the most directly comparable US GAAP measure, see
“Results of Operations - Non-GAAP Financial Measure Reconciliations.”
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The results of certain key business metrics are as follows:
Year Ended December 31,
(dollars in millions) 2021 2020 2019
Net sales $ 20,820.8 $ 18,467.5 $ 18,032.4
Gross profit 3,568.5 3,210.1 3,039.9
Operating income 1,419.0 1,179.2 1,133.6
Net income 988.6 788.5 736.8
Non-GAAP operating income 1,645.4 1,404.6 1,368.4
Non-GAAP net income 1,118.9 954.4 902.1
Average daily sales
(1)
82.0 72.7 71.0
Net debt
(2)
6,600.4 2,517.0 3,163.3
Cash conversion cycle (in days)
(3)
24 17 18
(1) There were 254 selling days for each of the years ended December 31, 2021, 2020, and 2019.
(2) Defined as Total debt minus Cash and cash equivalents.
(3) Cash conversion cycle is defined as days of sales outstanding in Accounts receivable and certain receivables due from
vendors plus days of supply in Merchandise inventory minus days of purchases outstanding in Accounts payable and
Accounts payable-inventory financing, based on a rolling three-month average.
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Results of Operations
Results of operations, in dollars and as a percentage of Net sales are as follows:
Year Ended December 31,
2021 2020
Dollars in
Millions
Percentage of
Net Sales
Dollars in
Millions
Percentage of
Net Sales
Net sales
$ 20,820.8 100.0 % $ 18,467.5 100.0 %
Cost of sales
17,252.3 82.9 15,257.4 82.6
Gross profit
3,568.5 17.1 3,210.1 17.4
Selling and administrative expenses
2,149.5 10.3 2,030.9 11.0
Operating income
1,419.0 6.8 1,179.2 6.4
Interest expense, net
(150.9) (0.7) (154.9) (0.8)
Other income (expense), net
29.7 0.1 (22.0) (0.1)
Income before income taxes
1,297.8 6.2 1,002.3 5.5
Income tax expense
(309.2) (1.5) (213.8) (1.2)
Net income
$ 988.6 4.7 % $ 788.5 4.3 %
Net sales
Net sales by segment, in dollars and as a percentage of total Net sales, and the year-over-year dollar and percentage change in
Net sales are as follows:
Year Ended December 31,
2021 2020
(dollars in millions) Net Sales
Percentage
of Total
Net Sales Net Sales
Percentage
of Total
Net Sales
Dollar
Change
Percent
Change
(1)
Corporate
$ 8,179.7 39.3 % $ 6,846.0 37.1 % $ 1,333.7 19.5 %
Small Business
1,870.1 9.0 1,397.1 7.6 473.0 33.9
Public:
Government
2,155.6 10.4 2,978.5 16.1 (822.9) (27.6)
Education
4,108.7 19.7 3,458.1 18.7 650.6 18.8
Healthcare
1,919.3 9.2 1,701.1 9.2 218.2 12.8
Total Public
8,183.6 39.3 8,137.7 44.0 45.9 0.6
Other
2,587.4 12.4 2,086.7 11.3 500.7 24.0
Total Net sales
$ 20,820.8 100.0 % $ 18,467.5 100.0 % $ 2,353.3 12.7 %
(1) There were 254 selling days for both the years ended December 31, 2021 and 2020.
Total Net sales for the year ended December 31, 2021 increased $2,353 million, or 12.7%, to $20,821 million, compared to the
prior year. This increase includes $197 million of Net sales from the acquisition of Sirius which closed on December 1, 2021.
The Net sales impact from the acquisition of Sirius is included in our Corporate, Small Business and Public segments. Net sales
growth was primarily driven by Corporate, Education and Small Business customers and the results from the UK and Canadian
operations included in Other, partially offset by lower Net sales to Government customers.
Corporate segment Net sales for the year ended December 31, 2021 increased $1,334 million, or 19.5%, compared to the year
ended December 31, 2020. The increase was primarily driven by hybrid work resulting in higher demand for notebooks/mobile
devices, video and accessories. Additionally, Corporate customers continued to prioritize digital transformation, hybrid and
cloud and security, driving growth in solutions categories, including servers and software.
Small Business segment Net sales for the year ended December 31, 2021 increased by $473 million, or 33.9%, compared to the
year ended December 31, 2020. Customers continued to focus on remote enablement as Net sales growth was driven by
notebooks/mobile devices, video and accessories.
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Public segment Net sales for the year ended December 31, 2021 increased $46 million, or 0.6%, compared to the year ended
December 31, 2020. The increase was primarily driven by growth in Education and Healthcare customers, offset by lower Net
sales with Government customers. Net sales to Education customers increased 18.8% primarily driven by integrated solutions,
including notebooks/mobile devices, video, accessories and services. Schools continued to prioritize equity and access to
learning and investing in the interactive learning experience for both the classroom and dorm room. Net sales to Healthcare
customers increased 12.8% primarily driven by desktops, software, notebooks/mobile devices, servers, video and services.
Healthcare customers saw patients returning for elective procedures which increased confidence in budgets, enabling delayed
projects to restart. Net sales to Government customers decreased 27.6%. Government decreased in most transactional and
solutions categories primarily driven by several one-time activities in 2020 that did not reoccur in 2021, including the Census
project, timebound stimulus funding and device refreshes related to large customer contracts. In addition, Government had
contracting delays across certain large contracts in 2021.
Net sales in Other, which is comprised of results from our UK and Canadian operations, for the year ended December 31, 2021
increased $501 million, or 24.0%, compared to the year ended December 31, 2020. UK and Canadian Net sales increased as a
result of the economic recovery from 2020 and increased customer confidence. Customers in the UK and Canada remained
focused on hybrid work and learning as Net sales growth was driven by notebooks/mobile devices, video and software. The
impact of foreign currency exchange increased Other Net sales by approximately 810 basis points, primarily due to the
favorable translation of the Canadian dollar and British pound to the US dollar.
Gross profit
Gross profit increased $359 million, or 11.2%, to $3,569 million for the year ended December 31, 2021, compared to $3,210
million for the year ended December 31, 2020. As a percentage of Net sales, Gross profit margin decreased 30 basis points to
17.1% for the year ended December 31, 2021. This decrease in Gross profit margin was primarily due to lower product margin
and higher margin configuration services in the prior year, partially offset by an increase in the mix of net service contract
revenue, primarily Software as a Service, increase in Net sales and related margins on professional services.
Selling and administrative expenses
Selling and administrative expenses increased $119 million, or 5.8%, to $2,150 million for the year ended December 31, 2021,
compared to $2,031 million for the year ended December 31, 2020. The increase was primarily due to higher payroll expenses
consistent with higher Gross profit, higher coworker count and higher performance-based compensation consistent with higher
attainment against financial goals, and higher acquisition and integration costs, partially offset by lower intangible asset
amortization and lower bad debt expense. Total coworker count was 13,924, up 3,942 from 9,982 at December 31, 2020
primarily due to an increase in customer-facing coworkers as a result of our recent acquisitions and an increase in new hires
during 2021.
As a percentage of total Net sales, Selling and administrative expenses decreased 70 basis points to 10.3% for the year ended
December 31, 2021, compared to 11.0% for the year ended December 31, 2020 primarily due to lower intangible asset
amortization, lower bad debt expense and lower payroll expenses as a percentage of Net sales.
Operating income
Operating income by segment, in dollars and as a percentage of Net sales, and the year-over-year percentage change was as
follows:
Year Ended December 31,
2021 2020
Dollars in
Millions
Operating
Margin
Dollars in
Millions
Operating
Margin
Percent Change
in Operating
Income
Segments:
(1)
Corporate
$ 697.3 8.5 % $ 489.5 7.2 % 42.4 %
Small Business
167.7 9.0 99.0 7.1 69.4
Public
606.7 7.4 678.2 8.3 (10.5)
Other
(2)
115.8 4.5 65.9 3.2 75.5
Headquarters
(3)
(168.5) nm* (153.4) nm* (9.7)
Total Operating income
$ 1,419.0 6.8 % $ 1,179.2 6.4 % 20.3 %
* Not meaningful
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(1) Segment operating income includes the segment’s direct operating income, allocations for certain Headquarters’ costs,
allocations for income and expenses from logistics services, certain inventory adjustments and volume rebates and
cooperative advertising from vendors.
(2) Includes the financial results for our other operating segments, CDW UK and CDW Canada, which do not meet the
reportable segment quantitative thresholds.
(3) Includes Headquarters’ function costs that are not allocated to the segments.
Operating income was $1,419 million for the year ended December 31, 2021, an increase of $240 million, or 20.3%, compared
to $1,179 million for the year ended December 31, 2020. Operating income increased primarily due to higher Gross profit
dollars, lower intangible asset amortization and lower bad debt expense, partially offset by higher payroll expenses consistent
with higher Gross profit, higher coworker count, higher performance-based compensation consistent with higher attainment
against financial goals, and higher acquisition and integration expenses. Total operating margin percentage increased 40 basis
points to 6.8% for the year ended December 31, 2021, from 6.4% for the year ended December 31, 2020 primarily due to lower
intangible asset amortization, lower bad debt expense and lower payroll as a percentage of Net sales, partially offset by lower
Gross profit margin and higher acquisition and integration expenses as a percentage of Net sales.
Corporate segment Operating income was $697 million for the year ended December 31, 2021, an increase of $207 million, or
42.4%, compared to $490 million for the year ended December 31, 2020. Corporate segment Operating income increased
primarily due to higher Gross profit and lower intangible asset amortization, partially offset by higher payroll expenses.
Corporate segment operating margin percentage increased 130 basis points to 8.5% for the year ended December 31, 2021,
from 7.2% for the year ended December 31, 2020 primarily due to lower intangible asset amortization and lower payroll
expense as a percentage of Net sales.
Small Business segment Operating income was $168 million for the year ended December 31, 2021, an increase of $69 million,
or 69.4%, compared to $99 million for the year ended December 31, 2020. Small Business segment Operating income increased
primarily due to higher Gross profit and lower intangible asset amortization, partially offset by higher payroll expenses. Small
Business segment operating margin percentage increased 190 basis points to 9.0% for the year ended December 31, 2021, from
7.1% for the year ended December 31, 2020 primarily due to lower intangible asset amortization and lower payroll expenses as
a percentage of Net sales.
Public segment Operating income was $607 million for the year ended December 31, 2021, a decrease of $71 million, or
10.5%, compared to $678 million for the year ended December 31, 2020. Public segment Operating income decreased primarily
due to higher payroll expenses and lower Gross profit dollars. Public segment operating margin percentage decreased 90 basis
points to 7.4% for the year ended December 31, 2021, from 8.3% for the year ended December 31, 2020, primarily due to
higher payroll expenses and higher margin configuration services in the prior year.
Other Operating income, which is comprised of results from our UK and Canadian operations, was $116 million for the year
ended December 31, 2021, an increase of $50 million, or 75.5%, compared to $66 million for the year ended December 31,
2020. Other Operating income increased primarily due to higher Gross profit and lower bad debt expense, partially offset by
higher payroll expenses. Other operating margin percentage increased 130 basis points to 4.5% for the year ended December
31, 2021, from 3.2% for the year ended December 31, 2020, primarily due to lower expenses, including payroll expenses, bad
debt expense, intangible asset amortization, integration costs and other selling and administrative expenses, partially offset by
lower product margin.
Interest expense, net
Interest expense, net in 2021 was $151 million, a decrease of $4 million, compared to $155 million in 2020. This decrease was
primarily driven by lower effective interest rates in 2021 compared to 2020, partially offset by additional interest expense from
the $2.5 billion aggregate principal amount of senior notes issued on December 1, 2021, the net proceeds of which were used to
fund the acquisition of Sirius.
Other income (expense), net
During the year ended December 31, 2021, we sold all ownership interests in an equity method investment and recognized a
$36 million gain. During the year ended December 31, 2020, we completed the August 2020 senior notes refinancing and
recorded a $27 million Net loss on extinguishment of long-term debt.
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Income tax expense
Income tax expense was $309 million in 2021, compared to $214 million in 2020. The effective income tax rate, expressed by
calculating income tax expense as a percentage of Income before income taxes, was 23.8% and 21.3% for 2021 and 2020,
respectively.
For 2021, the effective tax rate differed from the US federal statutory rate primarily due to state and local income taxes and a
discrete deferred tax expense as a result of an increase in the UK corporate tax rate effective in 2023, partially offset by excess
tax benefits on equity-based compensation. For 2020, the effective tax rate differed from the US federal statutory rate primarily
due to state and local income taxes and a discrete deferred tax expense as a result of an increase in the UK corporate tax rate,
largely offset by excess tax benefits on equity-based compensation and tax benefits associated with global intangible low taxed
income and nondeductible expenses.
The 2021 effective tax rate was higher than 2020 primarily due to certain tax benefits incurred in the prior year with no similar
activity in the current year and a less favorable tax rate impact of excess tax benefits on equity-based compensation.
Non-GAAP Financial Measure Reconciliations
We have included reconciliations of Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP income
before income taxes, Non-GAAP net income and Net sales growth on a constant currency basis for the years ended December
31, 2021 and 2020 below.
Non-GAAP operating income excludes, among other things, charges related to the amortization of acquisition-related intangible
assets, equity-based compensation and the associated payroll taxes, and acquisition and integration expenses. Non-GAAP
operating income margin is defined as Non-GAAP operating income as a percentage of Net sales. Non-GAAP income before
income taxes and Non-GAAP net income exclude, among other things, charges related to acquisition-related intangible asset
amortization, equity-based compensation, acquisition and integration expenses, and the associated tax effects of each. Net sales
growth on a constant currency basis is defined as Net sales growth excluding the impact of foreign currency translation on Net
sales compared to the prior period.
Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP income before income taxes, Non-GAAP net
income and Net sales growth on a constant currency basis are considered non-GAAP financial measures. Generally, a non-
GAAP financial measure is a numerical measure of a company’s performance or financial condition that either excludes or
includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented
in accordance with US GAAP. Non-GAAP measures used by management may differ from similar measures used by other
companies, even when similar terms are used to identify such measures.
We believe these measures provide analysts, investors and management with helpful information regarding the underlying
operating performance of our business, as they remove the impact of items that management believes are not reflective of
underlying operating performance. Management uses these measures to evaluate period-over-period performance as
management believes they provide a more comparable measure of the underlying business. Certain non-GAAP financial
measures are also used to determine certain components of performance-based compensation.
Non-GAAP operating income
Non-GAAP operating income was $1,645 million for the year ended December 31, 2021, an increase of $240 million, or
17.1%, compared to $1,405 million for the year ended December 31, 2020. As a percentage of Net sales, Non-GAAP operating
income was 7.9% and 7.6% for the years ended December 31, 2021 and 2020, respectively.
Year Ended December 31,
(dollars in millions) 2021 2020
Operating income, as reported $ 1,419.0 $ 1,179.2
Amortization of intangibles
(1)
94.9 158.1
Equity-based compensation 72.6 42.5
Acquisition and integration expenses 54.3 4.9
Other adjustments 4.6 19.9
Non-GAAP operating income 1,645.4 1,404.6
Non-GAAP operating income margin 7.9 % 7.6 %
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(1) Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer
contracts and trade names.
Non-GAAP net income
Non-GAAP net income was $1,119 million for the year ended December 31, 2021, an increase of $165 million, or 17.2%,
compared to $954 million for the year ended December 31, 2020.
Year Ended December 31, 2021 Year Ended December 31, 2020
(dollars in millions)
Income
before
income
taxes
Income tax
expense
(1)
Net income
Income
before
income
taxes
Income tax
expense
(1)
Net income
US GAAP, as reported
$ 1,297.8 $ (309.2) $ 988.6 $ 1,002.3 $ (213.8) $ 788.5
Amortization of intangibles
(2)
94.9 (18.9) 76.0 158.1 (36.8) 121.3
Equity-based compensation
72.6 (42.6) 30.0 42.5 (37.0) 5.5
Acquisition and integration expenses
54.3 (10.4) 43.9 4.9 (1.2) 3.7
Gain on sale of equity method investment
(36.0) 8.5 (27.5) — — —
Net loss on extinguishment of long-term debt
6.0 (1.5) 4.5 27.3 (6.8) 20.5
Other adjustments
4.6 (1.2) 3.4 19.9 (5.0) 14.9
Non-GAAP
$ 1,494.2 $ (375.3) $ 1,118.9 $ 1,255.0 $ (300.6) $ 954.4
(1) Income tax on non-GAAP adjustments includes excess tax benefits associated with equity-based compensation.
(2) Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer
contracts and trade names.
Net sales growth on a constant currency basis
Net sales increased $2,353 million, or 12.7%, to $20,821 million for the year ended December 31, 2021, compared to $18,468
million for the year ended December 31, 2020. Net sales on a constant currency basis, which excludes the impact of foreign
currency translation, increased $2,207 million, or 11.9%.
Year Ended December 31,
(dollars in millions) 2021 2020 % Change
(1)
Net sales, as reported $ 20,820.8 $ 18,467.5 12.7 %
Foreign currency translation
(2)
— 146.2
Net sales, on a constant currency basis $ 20,820.8 $ 18,613.7 11.9 %
(1) There were 254 selling days for both the years ended December 31, 2021 and 2020.
(2) Represents the effect of translating Net sales for the year ended December 31, 2020 of CDW UK and CDW Canada at
the average exchange rates applicable in 2021.
Seasonality
While we have not historically experienced significant seasonality throughout the year, sales in our Corporate segment, which
primarily serves US private sector business customers with more than 250 employees, are typically higher in the fourth quarter
than in other quarters due to customers spending their remaining technology budget dollars at the end of the year. Additionally,
sales in our Public segment have historically been higher in the third quarter than in other quarters primarily due to the buying
patterns of the federal government and education customers. Since the onset of the pandemic, we have experienced variability
compared to historic seasonality trends. As uncertainty due to COVID-19 remains, seasonality may continue to be different
than historical experience.
Liquidity and Capital Resources
Overview
We finance our operations and capital expenditures with internally generated cash from operations and borrowings under our
revolving loan facility. As of December 31, 2021, we had $1.0 billion of availability for borrowings under our revolving loan
facility. Our liquidity and borrowing plans are established to align with our financial and strategic planning processes and
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ensure we have the necessary funding to meet our operating commitments, which primarily include the purchase of inventory,
payroll and general expenses. We also take into consideration our overall capital allocation strategy, which includes dividend
payments, assessment of debt levels, acquisitions and share repurchases. We believe we have adequate sources of liquidity and
funding available for at least the next year; however, there are a number of factors that may negatively impact our available
sources of funds. The amount of cash generated from operations will be dependent upon factors such as the successful
execution of our business plan, general economic conditions and working capital management.
Our material contractual obligations consist of debt and related interest payments and operating leases. See Note 9 (Debt) and
Note 11 (Leases) to the accompanying Consolidated Financial Statements for additional information regarding future maturities
of debt and operating leases.
Long-Term Debt and Financing Arrangements
During the fourth quarter of 2021, we entered into a commitment letter for a $2.5 billion senior unsecured 364-day bridge loan
facility (the “Bridge Facility”), which would have been used in the event permanent financing was not obtained on or before
completing the acquisition of Sirius. In lieu of borrowing under the Bridge Facility, on December 1, 2021, we obtained
permanent financing through the issuance of $1.0 billion aggregate principal amount of 2.670% Senior Notes due 2026,
$500 million aggregate principal amount of 3.276% Senior Notes due 2028 and $1.0 billion aggregate principal amount of
3.569% Senior Notes due 2031. The Bridge Facility was automatically terminated upon completing the acquisition of Sirius
without using the Bridge Facility.
Also during the fourth quarter of 2021, we entered into the Revolving Loan Facility, a new five-year $1.6 billion senior
unsecured revolving loan facility, which replaced the senior secured asset-based revolving credit facility (the “ABL Facility”).
On the same date, we also entered into the Term Loan Facility, a new five-year $1.4 billion senior unsecured term loan facility,
which replaced the senior secured term loan facility.
During the first quarter of 2021, we amended, extended and increased the size of the ABL Facility, prior to its extinguishment
during the fourth quarter. Simultaneously, we paid off the remaining principal amount on the variable rate CDW UK term loan
by drawing on the ABL Facility.
As of December 31, 2021, we had total unsecured indebtedness of $6.9 billion. At December 31, 2021, we were in compliance
with the covenants under our various credit agreements and indentures.
For additional information regarding our debt and refinancing activities, see Note 9 (Debt) to the accompanying Consolidated
Financial Statements. For additional information regarding the acquisition of Sirius, see Note 3 (Acquisitions) to the
accompanying Consolidated Financial Statements.
Inventory Financing Agreements
We have entered into agreements with certain financial intermediaries to obtain more favorable terms on purchases of inventory
from various suppliers under certain terms and conditions. These amounts are classified separately as Accounts payable-
inventory financing on the Consolidated Balance Sheets. We do not incur any interest expense associated with these agreements
as balances are paid when they are due. For additional information, see Note 7 (Inventory Financing Agreements) to the
accompanying Consolidated Financial Statements.
Share Repurchase Program
During 2021, we repurchased 8.7 million shares of our common stock for $1,500 million under the previously announced share
repurchase program. For additional information, refer to Note 12 (Stockholders’ Equity) to the accompanying Consolidated
Financial Statements.
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Dividends
A summary of 2021 dividend activity for our common stock is as follows:
Dividend Amount Declaration Date Record Date Payment Date
$0.400 February 10, 2021 February 25, 2021 March 10, 2021
$0.400 May 5, 2021 May 25, 2021 June 10, 2021
$0.400 August 4, 2021 August 25, 2021 September 10, 2021
$0.500 November 3, 2021 November 24, 2021 December 10, 2021
$1.700
On February 9, 2022, we announced that our Board of Directors declared a quarterly cash dividend on our common stock of
$0.500 per share. The dividend will be paid on March 10, 2022 to all stockholders of record as of the close of business on
February 25, 2022.
The payment of any future dividends will be at the discretion of our Board of Directors and will depend upon our results of
operations, financial condition, business prospects, capital requirements, contractual restrictions, any potential indebtedness we
may incur, restrictions imposed by applicable law, tax considerations and other factors that our Board of Directors deems
relevant. In addition, our ability to pay dividends on our common stock will be limited by restrictions on our ability to pay
dividends or make distributions to our stockholders and on the ability of our subsidiaries to pay dividends or make distributions
to us, in each case, under the terms of our current and any future agreements governing our indebtedness.
Cash Flows
Cash flows from operating, investing and financing activities are as follows:
Year Ended December 31,
(dollars in millions) 2021 2020
Net cash provided by (used in):
Operating activities
$ 784.6 $ 1,314.3
Investing activities
Capital expenditures
(1)
(100.0) (158.0)
Acquisitions of businesses, net of cash acquired
(2,705.6) (43.0)
Proceeds from sale of equity method investment
36.0 —
Cash flows used in investing activities
(2,769.6) (201.0)
Financing activities
Net change in accounts payable - inventory financing
(161.8) 93.0
Financing payments on revenue generating assets
(46.1) (18.1)
Other cash flows used in financing activities
1,040.7 63.9
Cash flows provided by financing activities
832.8 138.8
Effect of exchange rate changes on cash and cash equivalents
0.1 4.1
Net (decrease) increase in cash and cash equivalents
$ (1,152.1) $ 1,256.2
(1) Includes expenditures for revenue generating assets
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Operating Activities
Cash flows from operating activities are as follows:
Year Ended December 31,
(dollars in millions) 2021 2020 Change
Net income $ 988.6 $ 788.5 $ 200.1
Adjustments for the impact of non-cash items
(1)
227.6 520.9 (293.3)
Net income adjusted for the impact of non-cash items 1,216.2 1,309.4 (93.2)
Changes in assets and liabilities:
Accounts receivable
(2)
(616.8) (226.4) (390.4)
Merchandise inventory
(3)
(151.0) (71.4) (79.6)
Accounts payable-trade
(4)
374.5 253.7 120.8
Other
(5)
(38.3) 49.0 (87.3)
Net cash provided by operating activities $ 784.6 $ 1,314.3 $ (529.7)
(1) Includes items such as depreciation and amortization, equity-based compensation expense, amortization of deferred
financing costs, deferred income taxes and net loss on extinguishment of long-term debt.
(2) The change is primarily due to higher Accounts receivable balance in Public segment.
(3) The change is primarily due to higher customer-driven stocking positions in 2021.
(4) The change is primarily due to mixing out of vendors with extended payment terms in 2021 and higher inventory
purchases at the end of 2020, partially offset by timing of payments at the end of 2021.
(5) The change is primarily due to higher contract liabilities in 2021, partially offset by a decrease in accrued
compensation, a decrease in lease incentives and an increase in receivables from vendors in 2021.
In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle, defined as days of
sales outstanding in accounts receivable plus days of supply in inventory minus days of purchases outstanding in accounts
payable, based on a rolling three-month average. Components of our cash conversion cycle are as follows:
December 31,
(in days) 2021 2020
Days of sales outstanding (DSO)
(1)
65 57
Days of supply in inventory (DIO)
(2)
17 14
Days of purchases outstanding (DPO)
(3)
(58) (54)
Cash conversion cycle
24 17
(1) Represents the rolling three-month average of the balance of Accounts receivable, net at the end of the period, divided
by average daily Net sales for the same three-month period. Also incorporates components of other miscellaneous
receivables.
(2) Represents the rolling three-month average of the balance of Merchandise inventory at the end of the period divided by
average daily Cost of sales for the same three-month period.
(3) Represents the rolling three-month average of the combined balance of Accounts payable-trade, excluding cash
overdrafts, and Accounts payable-inventory financing at the end of the period divided by average daily Cost of sales
for the same three-month period.
The cash conversion cycle increased to 24 days at December 31, 2021, compared to 17 days at December 31, 2020. DSO, DIO
and DPO increased 8 days, 3 days and 4 days, respectively. The increase in DSO was primarily driven by higher Accounts
receivable balance in Public segment and increased net service contract revenue, such as software as a service and warranties.
The increase in net service contract revenue also results in a favorable impact on DPO. DPO further benefited from favorability
in timing of payments at the end of 2021. Additionally, DIO increased due to higher customer and strategic stocking positions
in 2021 relative to 2020.
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37
Investing Activities
Net cash used in investing activities increased $2,569 million in 2021 compared to 2020. The increase was primarily due to the
acquisitions of Sirius, Amplified IT LLC and Focal Point Data Risk LLC, partially offset by lower capital expenditures and
proceeds from the sale of an equity method investment. For additional information regarding the acquisitions, see Note 3
(Acquisitions) to the accompanying Consolidated Financial Statements.
Financing Activities
Net cash provided by financing activities increased $694 million in 2021 compared to 2020. The increase was primarily due to
the issuance of $2.5 billion aggregate principal amount of senior notes issued on December 1, 2021 which was used to fund the
acquisition of Sirius and increased borrowings under our revolving credit facilities, partially offset by higher share repurchases
and the mixing out of vendors with extended payment terms under our inventory financing arrangements. For additional
information regarding the inventory financing and debt activities, see Note 7 (Inventory Financing Agreements) and Note 9
(Debt) to the accompanying Consolidated Financial Statements.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our
financial condition, results of operations or liquidity.
Issuers and Guarantors of Debt Securities
Each series of our outstanding unsecured senior notes (the “Notes”) are issued by CDW LLC and CDW Finance Corporation
(the “Issuers”) and are guaranteed by CDW Corporation (“Parent”) and certain of each CDW LLC’s direct and indirect, 100%
owned, domestic subsidiaries (the “Guarantor Subsidiaries” and, together with Parent, the “Guarantors”). All guarantees by
Parent and the Guarantors are joint and several, and full and unconditional; provided that guarantees by the Guarantor
Subsidiaries are subject to certain customary release provisions contained in the indentures governing the Notes.
The Notes and the related guarantees are the Issuers’ and the Guarantors’ senior unsecured obligations and are:
• structurally subordinated to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries
and
• rank equal in right of payment with all of the Issuers’ and the Guarantors’ existing and future unsecured senior debt.
The following tables set forth Balance Sheet information as of December 31, 2021 and December 31, 2020, and Statement of
Operations information for the years ended December 31, 2021 and 2020 for the accounts of the Issuers and the accounts of the
Guarantors (the “Obligor Group”). The financial information of the Obligor Group is presented on a combined basis and the
intercompany balances and transactions between the Obligor Group have been eliminated.
Balance Sheet Information
December 31,
(dollars in millions) 2021 2020
Current assets $ 4,584.1 $ 5,161.3
Goodwill 2,373.1 2,239.1
Other assets 1,017.3 572.1
Total Non-current assets 3,390.4 2,811.2
Current liabilities 3,393.0 3,265.0
Long-term debt 6,534.6 3,856.5
Other liabilities 562.4 209.8
Total Long-term liabilities 7,097.0 4,066.3
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Statements of Operations Information
Year Ended December 31,
(dollars in millions) 2021 2020
Net sales $ 17,979.4 $ 16,380.8
Gross profit 3,078.0 2,851.8
Operating income 1,301.9 1,113.2
Net income 921.3 738.8
Commitments and Contingencies
The information set forth in Note 16 (Commitments and Contingencies) to the accompanying Consolidated Financial
Statements included in Part II, Item 8 of this report is incorporated herein by reference.
Critical Accounting Policies and Estimates
The preparation of the Consolidated Financial Statements in accordance with US GAAP requires management to make use of
certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as
related disclosure of contingent assets and liabilities in the Consolidated Financial Statements and accompanying notes. We
base our estimates on historical experience and on various other assumptions that we believe are reasonable under the
circumstances. Historically, we have not made significant changes to the methods for determining these estimates as our actual
results have not differed materially from our estimates. We do not believe it is reasonably likely that the estimates and related
assumptions will change materially in the foreseeable future; however, actual results could differ from those estimates under
different assumptions, judgments or conditions.
Critical accounting policies and estimates are those that are most important to the portrayal of our financial condition and
results of operations, and which require us to make our most difficult and subjective judgments, often as a result of the need to
make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting
policies and estimates addressed below. For additional information related to significant accounting policies used in the
preparation of our Consolidated Financial Statements, see Note 1 (Description of Business and Summary of Significant
Accounting Policies) to the accompanying Consolidated Financial Statements.
Revenue Recognition
We sell some of our products and services as part of bundled contract arrangements containing multiple deliverables, which
may include a combination of different products and services. Significant judgment may be required when determining whether
products and services are considered distinct performance obligations that should be accounted for separately versus together.
For contracts consisting of multiple performance obligations, the total transaction price is allocated to each performance
obligation based upon its standalone selling price. Judgment is required to determine the standalone selling price for each
distinct performance obligation. For certain performance obligations, we will use a combination of methods to estimate the
standalone selling price based on recent transactions. When evidence from recent transactions is not available to confirm that
the prices are representative of the standalone selling price, an expected cost plus margin approach is used.
Additional judgment is required in determining whether we are the principal, and report revenues on a gross basis, or agent, and
report revenues on a net basis. For each identified performance obligation in a transaction, we evaluate the facts and
circumstances present to determine whether or not we control the specified good or service prior to transfer to the customer.
This evaluation includes, but is not limited to, assessing indicators such as whether: (i) we are primarily responsible for
fulfilling the promise to provide the specified goods or service, (ii) we have inventory risk before the specified good or service
has been transferred to a customer and (iii) we have discretion in establishing the price for the specified good or service. When
the evaluation indicates we control the specified good or service prior to transfer to the customer, we are acting as a principal.
When the evaluation indicates we do not control the specified good or service prior transfer to the customer, we are acting as an
agent.
The nature of our contracts give rise to variable consideration in the form of volume rebates and sales returns and allowances.
We estimate variable consideration at the most likely amount to which we expect to be entitled. The estimates of variable
consideration and determination of whether to include estimated amounts in the transaction price are based on an assessment of
our anticipated performance and all information that is reasonably available.
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We recognize revenue on performance obligations when the customer obtains control over the specified good or service. That
is, when the customer has the ability to direct the use of and obtain substantially all of the benefits from the good or service. For
the sale of hardware and software, this is generally upon delivery to the customer. As a result, we perform an analysis to
estimate the amount of Net sales in-transit at the end of the period and adjust revenue and the related costs to reflect only what
has been delivered to the customer. This analysis requires judgment whereby we perform an analysis of the estimated number
of days of sales in-transit to customers at the end of each reporting period based on a weighted-average analysis of commercial
delivery terms that include drop-shipment arrangements. Changes in delivery patterns may result in a different number of
business days estimated to make this adjustment.
Goodwill
Goodwill is allocated to reporting units expected to benefit from the business combination. Goodwill is subject to periodic
testing for impairment at the reporting unit level on an annual basis during the fourth quarter, or more frequently if events or
changes in circumstances indicate that the asset may be impaired. These events or circumstances could include a significant
change in the business climate, legal factors, operating performance indicators, competition or sale or disposition of a
significant portion of a reporting unit.
We may elect to utilize a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting
unit is less than its carrying value. As part of our qualitative assessment, judgment is required in weighing the effect of various
positive and negative factors that may affect the fair value. We consider various factors, including the excess of fair value over
carrying value from the last quantitative test, macroeconomic conditions, industry and market considerations, the projected
financial performance and actual financial performance compared to prior year projected financial performance.
If we elect to bypass the qualitative assessment, or if indicators of impairment exist, a quantitative impairment test is performed.
As part of the quantitative assessment, application of the goodwill impairment test requires judgment, including the
identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units,
and determination of the fair value of each reporting unit. Fair value of a reporting unit is determined by using a weighted
combination of an income approach and a market approach, as this combination is considered the most indicative of our fair
value in an orderly transaction between market participants. This analysis requires significant judgments, including estimation
of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business,
estimation of the useful life over which cash flows will occur, determination of our weighted average cost of capital, future
market conditions and profitability of future business strategies. The estimates used to calculate the fair value of a reporting unit
change from year to year based on operating results, market conditions and other factors. Changes in these estimates and
assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. However,
our past estimates of fair value would not have indicated an impairment when revised to include subsequent years’ actual
results.
We completed our annual impairment analysis during the fourth quarter of 2021. We performed a qualitative analysis for all
reporting units and concluded that it was more likely than not that the fair values of all reporting units exceeded their respective
carrying values and, therefore, did not result in an impairment. In 2020, we performed a quantitative analysis of goodwill
impairment and determined that no impairment existed.
Business combinations
We allocate purchase price consideration to the assets acquired and liabilities assumed based on their fair values as of the
acquisition date. Determining the fair value of these assets and liabilities requires the use of significant estimates, particularly in
valuing acquired intangible assets and Goodwill.
Purchased intangible assets other than goodwill are initially recognized at fair value and amortized over their useful lives. We
determine the fair value of purchased intangible using an income approach on an individual asset basis. The fair value
measurements were primarily based on significant inputs that are not observable, which are categorized as a Level 3
measurement in the fair value hierarchy. The values assigned to consideration transferred, assets acquired and liabilities
assumed may be adjusted during the measurement period as new information arises.
We use the multi-period excess earnings method to determine the fair value of customer relationships. This method identifies
the portion of revenue expected to be generated through repeat customers existing as of the valuation date and includes an
attrition rate to account for the loss of customers over time. Critical estimates utilized in valuing customer relationships include
estimated forecasted future revenue and EBITDA margin growth rates, customer attrition rates and market-participant discount
rates. The assumptions we apply in forecasting future revenue and customer attrition rates is based on analysis of historical data,
assessment of current and anticipated market conditions, estimated growth rates, and management plans.
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40
Recent Accounting Pronouncements
The information set forth in Note 2 (Recent Accounting Pronouncements) to the accompanying Consolidated Financial
Statements included in Part II, Item 8 of this report is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures of Market Risks
Interest Rate Risk
Our market risks relate primarily to changes in interest rates. The interest rates on borrowings under our senior unsecured
revolving loan facility and our senior unsecured term loan facility are floating and, therefore, are subject to fluctuations. In
order to manage the risk associated with changes in interest rates on borrowings under our senior unsecured term loan facility,
we have entered into interest rate caps to add stability to interest expense and to manage our exposure to interest rate
fluctuations.
As of December 31, 2021, we have an interest rate cap agreement in effect with a notional amount of $1.3 billion. For
additional information, see Note 8 (Financial Instruments) to the accompanying Consolidated Financial Statements.
Foreign Currency Risk
We transact business in foreign currencies other than the US dollar, primarily the British pound and the Canadian dollar, which
exposes us to foreign currency exchange rate fluctuations. Revenue and expenses generated from our international operations
are generally denominated in the local currencies of the corresponding countries. The functional currency of our international
operating subsidiaries is the same as the corresponding local currency. Upon consolidation, as results of operations are
translated, operating results may differ from expectations. The direct effect of foreign currency fluctuations on our results of
operations has not been material as the majority of our results of operations are denominated in US dollars.
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41
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
43
Consolidated Balance Sheets as of December 31, 2021 and 2020
46
Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019
47
Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019
48
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021, 2020 and 2019
49
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019
50
Notes to Consolidated Financial Statements
51
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42
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of CDW Corporation and subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of CDW Corporation and subsidiaries (the Company) as of
December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, stockholders’ equity,
and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement
schedule listed in the Index at Item 15(a) (2) (collectively referred to as the “consolidated financial statements”). In our opinion,
the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December
31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated February 28, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit
matters or on the accounts or disclosures to which they relate.
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43
Revenue recognition
Description of
the Matter
As described in Note 1 to the consolidated financial statements, the Company recognizes revenue upon
transfer of control of promised products or services to customers. The Company applies judgment in
determining whether it is the principal and reports revenue on a gross basis, or an agent and reports
revenue on a net basis. The Company also sells some of its products and services as part of bundled
contract arrangements containing multiple performance obligations.
Significant judgment may be required when determining whether products and services are considered
distinct performance obligations that should be accounted for separately versus together. For each
distinct performance obligation, judgment is required to determine the relative standalone selling price
to allocate the transaction price, such as using an expected cost plus margin approach.
Auditing the Company’s contracts with customers was challenging given the significant audit effort
required to analyze the Company’s various products, services and contract arrangements. For example,
certain customer contracts contain multiple parties and there can be subjective judgment in assessing
the Company’s role as principal or agent in the contract arrangement. For certain other customer
contracts, there can be judgment in the identification of the distinct performance obligations along with
the determination of the associated relative standalone selling prices.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding of the revenue process, evaluated the design and tested the operating
effectiveness of the Company’s internal controls over the relevant terms of the customer contracts,
including the determination of principal versus agent, the identification of distinct performance
obligations and the determination of the relative standalone selling price for separate performance
obligations.
To test revenue recognition, our audit procedures included among others, examination of executed
customer contracts for a sample of sales transactions, and evaluating the Company’s determination of
principal versus agent, identifying products and services in the contract and assessing separate distinct
performance obligations. To test management’s determination of relative standalone selling price for
separate performance obligations, we performed audit procedures that included, among others,
assessing the appropriateness of the methodology applied, testing the mathematical accuracy of the
underlying data and calculations and inspecting the underlying data information on a sample basis.
Accounting for the Acquisition of Sirius - Valuation of Intangible Assets
Description of
the Matter
As described in Note 1 and Note 3 to the consolidated financial statements, the Company acquired
Granite Parent, Inc. (also referred to as “Sirius”) for net consideration of $2.4 billion during the year
ended December 31, 2021. The transaction was accounted for as a business combination and the
Company preliminarily allocated $1.1 billion of the purchase price to the fair value of identified
intangible assets.
Auditing the Company’s accounting for its acquisition of Sirius was complex due to the significant
estimation uncertainty in the Company’s preliminary determination of the fair value of identified
intangible assets of $1.1 billion, which principally consisted of customer relationships of $1,090.0
million. The significant estimation uncertainty was primarily due to the sensitivity of the fair value of
customer relationships to underlying assumptions about the future performance of the acquired business
and the expectations of market participant synergies on which those assumptions were based. The
Company used the income approach to measure customer relationships. The significant assumptions
used to estimate the value of customer relationships included the long-term growth rate, customer
attrition rate and discount rate. These significant assumptions are forward looking and could be affected
by future economic and market conditions.
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44
How We
Addressed the
Matter in Our
Audit
We obtained an understanding of the Company’s process for accounting for the acquisition. We tested
the design and operating effectiveness of the Company's controls over the estimation process
supporting the recognition and measurement of customer relationships. We also tested controls
regarding management’s review of assumptions used in the valuation model.
To test the fair value of the Company’s customer relationships, we performed, with the assistance of
our valuation specialists, audit procedures that included evaluating the Company’s selection of the
valuation methodology, significant assumptions used and completeness and accuracy of the underlying
data. For example, we compared the significant assumptions to historical and current industry, market
and economic trends. We also tested the underlying source information used and verified the
mathematical accuracy of the calculations within the valuation model.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2011.
Chicago, Illinois
February 28, 2022
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45
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions, except per share amounts)
December 31,
2021 2020
Assets
Current assets:
Cash and cash equivalents
$ 258.1 $ 1,410.2
Accounts receivable, net of allowance for credit losses of $20.4 and $29.6, respectively
4,499.4 3,212.6
Merchandise inventory
927.6 760.0
Miscellaneous receivables
435.5 379.5
Prepaid expenses and other
357.5 191.2
Total current assets
6,478.1 5,953.5
Operating lease right-of-use assets
155.6 130.8
Property and equipment, net
195.8 175.5
Goodwill
4,382.9 2,595.9
Other intangible assets, net
1,628.1 445.1
Other assets
358.9 43.9
Total Assets
$ 13,199.4 $ 9,344.7
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable-trade
$ 3,114.2 $ 2,088.4
Accounts payable-inventory financing
448.3 524.6
Current maturities of long-term debt
102.7 70.9
Contract liabilities
402.9 243.7
Accrued expenses and other current liabilities:
Compensation
361.7 288.3
Advertising
145.5 153.4
Sales and income taxes
65.9 104.2
Other
454.8 424.8
Total current liabilities
5,096.0 3,898.3
Long-term liabilities:
Debt
6,755.8 3,856.3
Deferred income taxes
222.3 55.3
Operating lease liabilities
184.2 169.0
Other liabilities
235.4 68.7
Total long-term liabilities
7,397.7 4,149.3
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 100.0 shares authorized; no shares issued or outstanding for
both periods
— —
Common stock, $0.01 par value, 1,000.0 shares authorized; 134.8 and 141.9 shares
outstanding, respectively
1.3 1.4
Paid-in capital
3,369.5 3,204.9
Accumulated deficit
(2,570.7) (1,813.4)
Accumulated other comprehensive loss
(94.4) (95.8)
Total stockholders’ equity
705.7 1,297.1
Total Liabilities and Stockholders’ Equity
$ 13,199.4 $ 9,344.7
The accompanying notes are an integral part of the Consolidated Financial Statements.
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46
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share amounts)
Year Ended December 31,
2021 2020 2019
Net sales
$ 20,820.8 $ 18,467.5 $ 18,032.4
Cost of sales
17,252.3 15,257.4 14,992.5
Gross profit
3,568.5 3,210.1 3,039.9
Selling and administrative expenses
2,149.5 2,030.9 1,906.3
Operating income
1,419.0 1,179.2 1,133.6
Interest expense, net
(150.9) (154.9) (159.4)
Other income (expense), net
29.7 (22.0) (24.5)
Income before income taxes
1,297.8 1,002.3 949.7
Income tax expense
(309.2) (213.8) (212.9)
Net income
$ 988.6 $ 788.5 $ 736.8
Net income per common share:
Basic
$ 7.14 $ 5.53 $ 5.08
Diluted
$ 7.04 $ 5.45 $ 4.99
Weighted-average common shares outstanding:
Basic
138.5 142.6 145.1
Diluted
140.5 144.8 147.8
The accompanying notes are an integral part of the Consolidated Financial Statements.
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47
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in millions)
Year Ended December 31,
2021 2020 2019
Net income
$ 988.6 $ 788.5 $ 736.8
Other comprehensive income:
Unrealized loss from cash flow hedge, net of tax
— (0.6) (11.3)
Reclassification of cash flow hedge loss to net income, net of tax
2.5 6.0 1.7
Foreign currency translation, net of tax
(1.1) 16.6 22.4
Other comprehensive income
1.4 22.0 12.8
Comprehensive income
$ 990.0 $ 810.5 $ 749.6
The accompanying notes are an integral part of the Consolidated Financial Statements.
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48
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(dollars in millions)
Common Stock
Shares Amount
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive Loss
Total
Stockholders’
Equity
Balance as of December 31, 2018 147.7 $ 1.5 $ 2,996.9 $ (1,892.6) $ (130.6) $ 975.2
Net income — — — 736.8 — 736.8
Equity-based compensation expense — — 47.7 — — 47.7
Stock option exercises 1.3 — 34.9 — — 34.9
Coworker Stock Purchase Plan 0.1 — 14.9 — — 14.9
Repurchases of common stock (6.1) (0.1) — (657.1) — (657.2)
Dividend payments ($1.265 per share) — — 0.9 (184.3) — (183.4)
Incentive compensation plan stock withheld for taxes — — — (21.4) — (21.4)
Unrealized loss from hedge accounting — — — — (11.3) (11.3)
Reclassification of cash flow hedge loss to net income
— — — — 1.7 1.7
Foreign currency translation — — — — 22.4 22.4
Balance as of December 31, 2019 143.0 $ 1.4 $ 3,095.3 $ (2,018.6) $ (117.8) $ 960.3
Net income — — — 788.5 — 788.5
Equity-based compensation expense — — 42.5 — — 42.5
Stock option exercises 1.4 — 49.2 — — 49.2
Coworker Stock Purchase Plan 0.1 — 16.8 — — 16.8
Repurchases of common stock (2.6) — — (340.6) — (340.6)
Dividend payments ($1.540 per share) — — 1.1 (220.7) — (219.6)
Incentive compensation plan stock withheld for taxes — — — (22.5) — (22.5)
Unrealized loss from hedge accounting — — — — (0.6) (0.6)
Reclassification of cash flow hedge loss to net income
— — — — 6.0 6.0
Foreign currency translation — — — — 16.6 16.6
Adoption of Credit Losses ASU 2016-13 — — — 0.5 — 0.5
Balance as of December 31, 2020 141.9 $ 1.4 $ 3,204.9 $ (1,813.4) $ (95.8) $ 1,297.1
Net income — — — 988.6 — 988.6
Equity-based compensation expense — — 72.6 — — 72.6
Stock option exercises 1.5 — 69.9 — — 69.9
Coworker Stock Purchase Plan 0.1 — 20.6 — — 20.6
Repurchases of common stock (8.7) (0.1) — (1,500.3) — (1,500.4)
Dividend payments ($1.700 per share) — — 1.5 (236.3) — (234.8)
Incentive compensation plan stock withheld for taxes — — — (28.5) — (28.5)
Reclassification of cash flow hedge loss to net income
— — — — 2.5 2.5
Foreign currency translation — — — — (1.1) (1.1)
Adoption of Income Tax ASU 2019-12 — — — 19.2 — 19.2
Balance as of December 31, 2021 134.8 $ 1.3 $ 3,369.5 $ (2,570.7) $ (94.4) $ 705.7
The accompanying notes are an integral part of the Consolidated Financial Statements.
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49
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
Year Ended December 31,
2021 2020 2019
Cash flows from operating activities:
Net income
$ 988.6 $ 788.5 $ 736.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
191.2 425.6 267.1
Equity-based compensation expense
72.6 42.5 48.5
Deferred income taxes
(6.7) (20.2) (87.9)
Provision for credit losses
(5.4) 30.9 0.8
Other
(24.1) 42.1 28.2
Changes in assets and liabilities:
Accounts receivable
(616.8) (226.4) (244.8)
Merchandise inventory
(151.0) (71.4) (153.0)
Other assets
(134.8) 18.6 (10.9)
Accounts payable-trade
374.5 253.7 194.1
Other liabilities
96.5 30.4 248.3
Net cash provided by operating activities
784.6 1,314.3 1,027.2
Cash flows used in investing activities:
Capital expenditures
(100.0) (158.0) (236.3)
Acquisitions of businesses, net of cash acquired
(2,705.6) (43.0) (95.1)
Proceeds from the sale of equity method investment
36.0 — —
Net cash used in investing activities
(2,769.6) (201.0) (331.4)
Cash flows from financing activities:
Proceeds from borrowings under revolving credit facilities
1,619.7 1,024.0 2,445.5
Repayments of borrowings under revolving credit facilities
(1,300.5) (1,075.0) (2,394.5)
Proceeds from issuance of long-term debt
3,917.5 1,300.0 600.0
Payments to extinguish long-term debt
(1,469.2) (622.5) (539.0)
Payments of debt financing fees
(38.1) (16.2) (9.5)
Net change in accounts payable-inventory financing
(161.8) 93.0 (1.3)
Financing payments for revenue generating assets
(46.1) (18.1) —
Repurchases of common stock
(1,500.4) (340.6) (657.2)
Proceeds from stock option exercises
69.9 49.2 34.9
Payment of incentive compensation plan withholding taxes
(28.5) (22.5) (21.4)
Dividend payments
(234.8) (219.6) (183.4)
Other
5.1 (12.9) (23.9)
Net cash provided by (used in) financing activities
832.8 138.8 (749.8)
Effect of exchange rate changes on cash and cash equivalents
0.1 4.1 2.2
Net (decrease) increase in cash and cash equivalents
(1,152.1) 1,256.2 (51.8)
Cash and cash equivalents – beginning of period
1,410.2 154.0 205.8
Cash and cash equivalents – end of period
$ 258.1 $ 1,410.2 $ 154.0
Supplementary disclosure of cash flow information:
Interest paid
$ (134.3) $ (139.4) $ (154.2)
Income taxes paid, net
$ (351.0) $ (245.6) $ (272.2)
The accompanying notes are an integral part of the Consolidated Financial Statements.
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50
1. Description of Business and Summary of Significant Accounting Policies
Description of Business
CDW Corporation (“Parent”), a Fortune 500 company and member of the S&P 500 Index, is a leading multi-brand
provider of information technology (“IT”) solutions to small, medium and large business, government, education and
healthcare customers in the United States (“US”), the United Kingdom (“UK”) and Canada. The Company’s broad
array of offerings ranges from discrete hardware and software products to integrated IT solutions and services that
include on-premise, hybrid and cloud capabilities across hybrid infrastructure, digital experience and security.
Throughout this report, the terms “the Company” and “CDW” refer to Parent and its 100% owned subsidiaries.
Parent has two 100% owned subsidiaries, CDW LLC and CDW Finance Corporation. CDW LLC is an Illinois limited
liability company that, together with its 100% owned subsidiaries, holds all material assets and conducts all business
activities and operations of the Company. CDW Finance Corporation is a Delaware corporation formed for the sole
purpose of acting as co-issuer of certain debt obligations and does not hold any material assets or engage in any
business activities or operations.
Significant Accounting Policies
Basis of Presentation
The Consolidated Financial Statements have been prepared in conformity with accounting principles generally
accepted in the United States of America (“US GAAP”) and the rules and regulations of the US Securities and
Exchange Commission (“SEC”). The Company’s Consolidated Financial Statements are based on a fiscal year ended
December 31.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Parent and its 100% owned subsidiaries. All
intercompany transactions and accounts are eliminated in consolidation.
On October 15, 2021, the Company entered into a Purchase and Sale Agreement (the “Purchase Agreement”) to
acquire all issued and outstanding equity interests in Granite Parent, Inc., the parent company of Sirius Computer
Solutions, Inc. (“Sirius”), for a base purchase price of $2.5 billion in cash, subject to customary closing adjustments.
On December 1, 2021, the Company completed its acquisition of Sirius. The Company included the financial results of
Sirius in its Consolidated Financial Statements from the date of the acquisition. For additional information on the
acquisition of Sirius, refer to Note 3 (Acquisitions).
Reclassifications
Certain prior period amounts included in the Financing activities of the Consolidated Statements of Cash Flows have
been reclassified to conform with the current period presentation.
Use of Estimates
The preparation of the Consolidated Financial Statements in accordance with US GAAP requires management to make
certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenue and
expenses during the reported periods. The Company bases its estimates on historical experience and on various other
assumptions that management believes are reasonable under the circumstances, the results of which form the basis for
making judgments about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results and outcomes could differ from those estimates.
Except as noted within Note 2 (Recent Accounting Pronouncements) for the adoption of Accounting Standards Update
(“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, there have been no
changes to the Company’s significant accounting policies and estimates during the year ended December 31, 2021.
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CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
51
Business Combinations
The Company accounts for business combinations using the acquisition method of accounting, which allocates the fair
value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their
estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and
liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed,
management makes significant estimates and assumptions. The Company may utilize third-party valuation specialists
to assist the Company in the allocation. Initial purchase price allocations are subject to revision within the
measurement period, not to exceed one year from the date of acquisition. Acquisition-related expenses and transaction
costs associated with business combinations are expensed as incurred.
Cash and Cash Equivalents
Cash and cash equivalents include deposits in banks and short-term (original maturities of three months or less at the
time of purchase), highly liquid investments that are readily convertible to known amounts of cash and are so near
maturity that there is insignificant risk of changes in value due to interest rate changes.
Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount and typically do not bear interest. The Company
estimates an allowance for credit losses related to accounts receivable for future expected credit losses by using
relevant information such as historical information, current conditions, and reasonable and supportable forecasts. The
allowance is measured on a pool basis when similar risk characteristics exist, and a loss-rate for each pool is
determined using historical credit loss experience as the basis for the estimation of expected credit losses. Adjustments
to historical loss information are made for differences in current conditions as well as changes in forecasted
macroeconomic conditions, such as changes in the unemployment rate or gross domestic product growth rate. The
Company has typically observed a higher loss-rate experience with customers in pools associated with the Company’s
Corporate and Small Business segments, as compared to the pools associated with the Public segment.
The Company occasionally may transfer certain accounts receivable, without recourse, to third-party financial
companies as a method to accelerate cash collections and reduce the Company’s credit exposure. Under these
agreements, the Company may transfer certain accounts receivable in exchange for cash less a discount, as defined by
the agreements. The Company’s ability to sell receivables is dependent on the financial institutions’ willingness to
purchase such receivables. In addition, certain of these agreements also require that the Company continue to service,
administer and collect the sold accounts receivable. Such transfers are recognized as a sale and the related accounts
receivable is derecognized from the Consolidated Balance Sheet upon receipt of the third-party financing company’s
payment. During the years ended December 31, 2021 and 2020, the Company sold approximately $139 million and
$83 million, respectively, of accounts receivable.
Merchandise Inventory
Inventory is valued at the lower of cost and net realizable value. Cost is determined using a weighted-average cost
method. Price protection is recorded when earned as a reduction to the cost of inventory. The Company decreases the
value of inventory for estimated obsolescence equal to the difference between the cost of inventory and the net
realizable value, based upon an aging analysis of the inventory on hand, specifically known inventory-related risks and
assumptions about future demand and market conditions.
Miscellaneous Receivables
Miscellaneous receivables primarily consist of amounts due from vendors. The Company receives incentives from
vendors related to cooperative advertising, volume rebates, bid programs, price protection and other programs. These
incentives generally relate to written vendor agreements with specified performance requirements and are generally
recorded as adjustments to Cost of sales or Merchandise inventory, depending on the nature of the incentive.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. The Company calculates depreciation
expense using the straight-line method over the estimated useful lives of the assets. For revenue generating assets, the
Company calculates depreciation expense using the straight-line method to the estimated residual value over the
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estimated useful life of the assets. Property and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying amount may not be recoverable. Determination of recoverability is based on
an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. If the
carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for
the excess of the asset’s carrying amount over its fair value. Leasehold improvements are amortized over the shorter of
their estimated useful lives or the remaining lease term. Expenditures for major renewals and improvements that
extend the useful life of property and equipment are capitalized. Expenditures for maintenance and repairs are charged
to expense as incurred.
Leases
The Company enters into operating lease contracts, as assessed at contract inception, primarily for real estate, data
centers and equipment. On the lease commencement date, the Company records operating lease liabilities based on the
present value of the future lease payments. In determining the present value of future lease payments, the Company
uses its incremental borrowing rate based on the information available at the commencement date. For real estate and
data center contracts, the Company accounts for the lease and non-lease components as a single lease component. For
certain equipment leases, the Company applies a portfolio approach to account for the right-of-use asset and operating
lease liability. In assessing the lease term, the Company includes options to renew only when it is reasonably certain
that it will be exercised; a determination which is at the sole discretion of the Company. For leases with an initial term
of 12 months or less, the Company has elected to not record a right-of-use asset and lease liability. For equipment
leases used in revenue generating activities, the Company records a right-of-use asset and lease liability for leases with
a term of 12 months or less. The Company records lease expense on a straight-line basis over the lease term beginning
on the commencement date.
Goodwill
The Company performs an evaluation of goodwill at the reporting unit level, utilizing either a qualitative or
quantitative impairment test. A qualitative assessment is performed at least on an annual basis to determine whether it
is more likely than not that the fair value of a reporting unit is less than its carrying value. The Company performs a
quantitative impairment test for each reporting unit every three years, or more frequently if circumstances indicate a
potential impairment. The annual test for impairment is conducted as of December 1. The Company’s reporting units
included in the assessment of potential goodwill impairment are the same as its operating segments.
Under a qualitative assessment, the most recent quantitative assessment is used to determine if it is more likely than
not that the reporting unit’s goodwill is impaired. As part of this qualitative assessment, the Company assesses relevant
events and circumstances including macroeconomic conditions, industry and market conditions, cost factors, overall
financial performance, changes in share price and entity-specific events to determine if there is an indication of
impairment.
Under a quantitative assessment, goodwill impairment is identified by comparing the fair value of a reporting unit to
its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, goodwill is
considered impaired and an impairment charge is recognized in an amount equal to that excess, not to exceed the
carrying amount of goodwill. Fair value of a reporting unit is determined by using a weighted combination of an
income approach (75%) and a market approach (25%), as this combination is considered the most indicative of the
Company’s fair value in an orderly transaction between market participants.
Under the income approach, the Company determines fair value based on estimated future cash flows of a reporting
unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a
reporting unit and the rate of return an outside investor would expect to earn. The estimated future cash flows of each
reporting unit are based on internally generated forecasts for the remainder of the respective reporting period and the
next five years.
Under the market approach, the Company utilizes valuation multiples derived from publicly available information for
guideline companies to provide an indication of how much a knowledgeable investor in the marketplace would be
willing to pay for a company. The valuation multiples are applied to the reporting units.
Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and
assumptions, including Net sales growth rates, gross profit margins, operating margins, discount rates and future
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market conditions, among others. Any changes in the judgments, estimates or assumptions used could produce
significantly different results.
Intangible Assets
Intangible assets with determinable lives are amortized on a straight-line basis over their respective estimated useful
lives. The cost of computer software developed or obtained for internal use is capitalized and amortized on a straight-
line basis over the estimated useful life of the software. Intangible assets are reviewed for impairment when events or
changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of
recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its
eventual disposition. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an
impairment loss is recorded for the excess of the asset’s carrying amount over its fair value. In addition, each quarter,
the Company evaluates whether events and circumstances warrant a revision to the remaining estimated useful life of
each of these intangible assets. If the Company were to determine that a change to the remaining estimated useful life
of an intangible asset was necessary, then the remaining carrying amount of the intangible asset would be amortized
prospectively over that revised remaining useful life.
Deferred Financing Costs
Deferred financing costs, such as underwriting, financial advisory, professional fees and other similar fees are
capitalized and recognized in Interest expense, net over the estimated life of the related debt instrument using the
effective interest method or straight-line method, as applicable. The Company classifies deferred financing costs as a
direct deduction from the carrying value of the Long-term debt liability on the Consolidated Balance Sheets, except for
deferred financing costs associated with revolving credit facilities which are presented as an asset, within Other assets
on the Consolidated Balance Sheets.
Derivative Instruments
The Company has interest rate cap agreements for the purpose of hedging its exposure to fluctuations in interest rates.
The interest rate cap agreements are designated as cash flow hedges of interest rate risk and recorded at fair value in
Other assets on the Consolidated Balance Sheets. Changes in fair value of the derivative instruments, along with the
change in the fair value of the hedged item, are reported as a component of Accumulated other comprehensive loss
until reclassified to Interest expense, net in the same period the hedge transaction affects earnings.
Fair Value Measurements
Fair value is defined under US GAAP as the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. A fair value hierarchy has been
established for valuation inputs to prioritize the inputs into three levels based on the extent to which inputs used in
measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels
which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These
levels are:
Level 1 – observable inputs such as quoted prices for identical instruments traded in active markets.
Level 2 – inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or
similar instruments in markets that are not active and model-based valuation techniques for which all significant
assumptions are observable in the market or can be corroborated by observable market data for substantially the full
term of the assets or liabilities.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market
participants would use in pricing the asset or liability. The fair values are therefore determined using model-based
techniques that include option pricing models, discounted cash flow models and similar techniques.
Revenue Recognition
The Company is a primary distribution channel for a large group of vendors and suppliers, including original
equipment manufacturers (“OEMs”), software publishers and wholesale distributors.
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The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties
are identified, payment terms are established, the contract has commercial substance and collectability of consideration
is probable. The Company evaluates the following indicators amongst others when determining whether it is acting as
a principal in the transaction and recording revenue on a gross basis: (i) the Company is primarily responsible for
fulfilling the promise to provide the specified goods or service, (ii) the Company has inventory risk before the
specified good or service has been transferred to a customer or after transfer of control to the customer and (iii) the
Company has discretion in establishing the price for the specified good or service. If the terms of a transaction do not
indicate the Company is acting as a principal in the transaction, then the Company is acting as an agent in the
transaction and the associated revenues are recognized on a net basis.
The Company recognizes revenue once control has passed to the customer. The following indicators are evaluated in
determining when control has passed to the customer: (i) the Company has a right to payment for the product or
service, (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the
product to the customer, (iv) the customer has the significant risk and rewards of ownership of the product and (v) the
customer has accepted the product. The Company’s products can be delivered to customers in a variety of ways,
including (i) as physical product shipped from the Company’s warehouse, (ii) via drop-shipment by the vendor or
supplier or (iii) via electronic delivery of keys for software licenses. The Company’s shipping terms typically allow for
the Company to recognize revenue when the product reaches the customer’s location.
The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its
customers without having to physically hold the inventory at its warehouses. The Company is the principal in the
transaction and recognizes revenue for drop-shipment arrangements on a gross basis.
Revenue Recognition for Hardware
Revenues from sales of hardware products are recognized on a gross basis as the Company is acting as a principal in
these transactions, with the selling price to the customer recorded as Net sales and the acquisition cost of the product
recorded as Cost of sales. The Company recognizes revenue from these transactions when control has passed to the
customer, which is usually upon delivery of the product to the customer.
In some instances, the customer agrees to buy the product from the Company but requests delivery at a later date,
commonly known as bill-and-hold arrangements. For these transactions, the Company deems that control passes to the
customer when the product is ready for delivery. The Company views products ready for delivery when the customer
has a signed agreement, significant risk and rewards for the products and the ability to direct the assets, and the
products have been set aside specifically for the customer, cannot be redirected to another customer and for customer
orders that include configuration services, when such services have been completed.
The Company’s vendor partners warrant most of the products the Company sells. These manufacturer warranties are
assurance-type warranties and are not considered separate performance obligations. The warranties are not sold
separately and only provide assurance that products will conform with the manufacturer’s specifications. In some
transactions, a third party will provide the customer with an extended warranty. These extended warranties are sold
separately and provide the customer with a service in addition to assurance that the product will function as expected.
The Company considers these warranties to be separate performance obligations from the underlying product. For
extended warranties, the Company is arranging for those services to be provided by the third party and therefore is
acting as an agent in the transaction and records revenue on a net basis at the point of sale.
The Company sells cloud computing solutions which include Infrastructure as a Service (“IaaS”). IaaS solutions utilize
third-party partners to enable customers to access data center functionality in a cloud-based solution, including storage,
computing and networking. The Company recognizes revenue for cloud computing solutions for arrangements with
one-time invoicing to the customer at the time of invoice on a net basis as the Company is acting as an agent in the
transaction. For monthly subscription-based arrangements, the Company is acting as an agent in the transaction and
recognizes revenue as it invoices the customer for its monthly usage on a net basis.
Revenue Recognition for Software
Revenues from most software license sales are recognized as a single performance obligation on a gross basis as the
Company is acting as a principal in these transactions at the point the software license is delivered to the customer.
Generally, software licenses are sold with accompanying third-party delivered software assurance, which is a product
that allows customers to upgrade, at no additional cost, to the latest technology if new capabilities are introduced
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during the period that the software assurance is in effect. The Company evaluates whether the software assurance is a
separate performance obligation by assessing if the third-party delivered software assurance is critical or essential to
the core functionality of the software itself. This involves considering if the software provides its original intended
functionality to the customer without the updates, if the customer would ascribe a higher value to the upgrades versus
the up-front deliverable, if the customer would expect frequent intelligence updates to the software (such as updates
that maintain the original functionality), and if the customer chooses to not delay or always install upgrades. If the
Company determines that the accompanying third-party delivered software assurance is critical or essential to the core
functionality of the software license, the software license and the accompanying third-party delivered software
assurance are recognized as a single performance obligation. The value of the product is primarily the accompanying
support delivered by a third party and therefore the Company is acting as an agent in these transactions and recognizes
them on a net basis at the point the associated software license is delivered to the customer. For software licenses
where the accompanying third-party delivered software assurance is not critical or essential to the core functionality,
the software assurance is recognized as a separate performance obligation, with the associated revenue recognized on a
net basis at the point the related software license is delivered to the customer. For additional information regarding the
accounting for bundled arrangements, see “Revenue Recognition for Bundled Arrangements” below.
The Company sells cloud computing solutions which include Software as a Service (“SaaS”). SaaS solutions utilize
third-party partners to offer the Company’s customers access to software in the cloud that enhances office productivity,
provides security or assists in collaboration. The Company recognizes revenue for cloud computing solutions for
arrangements with one-time invoicing to the customer at the time of invoice on a net basis as the Company is acting as
an agent in the transaction. For monthly subscription-based arrangements, the Company is acting as an agent in the
transaction and recognizes revenue as it invoices the customer for its monthly usage on a net basis.
The Company’s customers are offered the opportunity by certain of its vendors to purchase software licenses and
software assurance under enterprise agreements (“EAs”). For most EA transactions, the Company’s obligation to the
customer is that of a distributor or sales agent of the services, where all obligations for providing the services to
customers are passed to the Company’s vendors. The Company’s performance obligations are satisfied at the time of
the sale. In other EA transactions, the Company is responsible for fulfilling the promised services to the customer and
providing remedy or refund for work if the customer is not satisfied with the delivered services, has inventory risk in
the arrangement and has full control to set the price for the customer. With most EAs, the Company’s vendors will
transfer the license and invoice the customer directly, paying resellers an agency fee or commission on these sales. The
Company records these fees as a component of Net sales as earned and there is no corresponding Cost of sales amount.
Revenue Recognition for Services
The Company provides professional services, which include project managers and consultants recommending,
designing and implementing IT solutions. Revenue from professional services is recognized either on a time and
materials basis or proportionally as costs are incurred for fixed fee project work. Revenue is recognized on a gross
basis each month as work is performed and the Company transfers those services.
Revenues from the sale of data center services, such as managed and remote managed services, server co-location,
internet connectivity and data backup and storage provided by the Company, are recognized over the period the service
is provided. Most hosting and managed service obligations are based on the quantity and pricing parameters
established in the agreement. As the customer receives the benefit of the service each month, the Company recognizes
the respective revenue on a gross basis as the Company is acting as a principal in the transaction. Additionally, the
Company’s managed services team provides project support to customers that are billed on a fixed fee basis. The
Company is acting as the principal in the transaction and recognizes revenue on a gross basis based on the total
number of hours incurred for the period over the total expected hours for the project. Total expected hours to complete
the project is updated for each period and best represents the transfer of control of the service to the customer.
Revenue Recognition for Bundled Arrangements
The Company also sells some of its products and services as part of bundled contract arrangements containing multiple
deliverables, which may include a combination of products and services. For each deliverable that represents a distinct
performance obligation, total arrangement consideration is allocated based upon the standalone selling prices of each
performance obligation.
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Sales In-Transit
The Company performs an analysis of the estimated number of days of sales in-transit to customers at the end of each
reporting period based on a weighted-average analysis of commercial delivery terms that include drop-shipment
arrangements. This analysis is the basis upon which the Company estimates the amount of Net sales in-transit at the
end of the period and adjusts revenue and the related costs to reflect only what has been delivered to the customer.
Changes in delivery patterns may result in a different number of business days estimated to make this adjustment.
Freight Costs
The Company records freight billed to its customers as Net sales and the related freight costs as Cost of sales when the
underlying product revenue is recognized. For freight not billed to its customers, the Company records the freight costs
as Cost of sales. The Company’s typical shipping terms result in shipping being performed before the customer obtains
control of the product. The Company considers shipping to be a fulfillment activity and not a separate performance
obligation.
Other
The nature of the Company’s contracts give rise to variable consideration in the form of volume rebates and sales
returns and allowances, which are estimated at contract inception. The Company estimates variable consideration at
the most likely amount to which it is expected to be entitled. This estimated amount is included in the transaction price
to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the
uncertainty associated with the variable consideration is resolved. The estimates of variable consideration and
determination of whether to include estimated amounts in the transaction price are based on an assessment of the
Company’s anticipated performance and all information that is reasonably available. At the time of sale, the Company
records a liability for estimated sales returns and allowances and an associated right of return asset. The Company also
records a provision for volume rebates based on the evaluation of contract terms and historical experience.
The Company excludes amounts collected on behalf of third-parties, such as sales taxes, when determining the
transaction price.
When a contract results in revenue being recognized in excess of the amount the Company has the right to invoice to
the customer, a contract asset is recorded on the Consolidated Balance Sheets. Contract assets are comprised primarily
of professional services with fixed fee arrangements.
Contract liabilities consist of payments received from customers, or such consideration that is contractually due, in
advance of providing the product or performing services. Contract liabilities are comprised primarily of professional
services with fixed fee arrangements, bill-and-hold transactions where control has not passed to the customer and
certain governmental contracts.
Trade accounts receivable are recorded at the point of sale (or in accordance with the Statement of Work for services)
for the total amount payable by the customer to the Company for sale of goods and services. Taxes to be collected
from the customer as part of the sale are included in Accounts receivable.
Any incremental direct costs of obtaining a contract, primarily sales commissions, are deferred on the Consolidated
Balance Sheets and amortized over the period of contract performance.
The Company generally does not enter into long-term contracts. The Company has elected to use the practical
expedient for its performance obligations table to include only those contracts that are longer than 12 months at the
time of contract inception and those contracts that are non-cancelable. Additionally, for certain governmental contracts
where there are annual renewals, the Company has excluded these contracts since there is only a one-year legal
obligation. Typically, the only contracts that are longer than 12 months in duration are related to the Company’s
managed services business.
The Company requests payments for its products and services at the point of sale. The Company generally does not
enter into any long-term financing arrangements or payment plans with customers or contracts with customers that
have non-cash consideration.
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Sales Taxes
Sales tax amounts collected from customers for remittance to governmental authorities are presented on a net basis in
the Consolidated Statements of Operations.
Advertising
Advertising costs are generally charged to expense in the period incurred and are recorded in Selling and
administrative expenses in the Consolidated Statements of Operations. Cooperative reimbursements from vendors are
recorded in the period the related advertising expenditure is incurred. The Company classifies vendor consideration as
a reduction to Cost of sales. During the years ended December 31, 2021, 2020 and 2019, the Company had advertising
costs of $199 million, $191 million and $193 million, respectively.
Equity-Based Compensation
The Company measures all equity-based payments using a fair-value-based method and records compensation expense
over the requisite service period using the straight-line method in its Consolidated Financial Statements. The expense
calculation includes estimated forfeiture rates, which have been developed based upon historical experience.
Interest Expense
Interest expense is recognized in the period incurred at the applicable interest rate in effect.
Foreign Currency Translation
The Company’s reporting currency is the US dollar. The functional currency of the Company’s international operating
subsidiaries is generally the same as the corresponding local currency. Assets and liabilities of the international
operating subsidiaries are translated at the spot rate in effect at the applicable reporting date. Revenues and expenses of
the international operating subsidiaries are translated at the average exchange rates in effect during the applicable
period. The resulting foreign currency translation adjustment is recorded as Accumulated other comprehensive loss,
which is reflected as a separate component of Stockholders’ equity.
Income Taxes
Deferred income taxes are provided to reflect the differences between the tax bases of assets and liabilities and their
reported amounts in the Consolidated Financial Statements using enacted tax rates in effect for the year in which the
differences are expected to reverse. The Company performs an evaluation of the realizability of deferred tax assets on
a quarterly basis. This evaluation requires management to make use of estimates and assumptions and considers all
positive and negative evidence and factors, such as the scheduled reversal of temporary differences, the mix of
earnings in the jurisdictions in which the Company operates, and prudent and feasible tax planning strategies.
The Company accounts for unrecognized tax benefits based upon its assessment of whether a tax benefit is more likely
than not to be sustained upon examination by tax authorities. The Company reports a liability for unrecognized tax
benefits resulting from unrecognized tax benefits taken or expected to be taken in a tax return and recognizes interest
and penalties, if any, related to its unrecognized tax benefits in income tax expense.
2. Recent Accounting Pronouncements
Accounting for Contract Assets and Contract Liabilities
In October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-08, Business Combinations
(Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU
requires entities to recognize contract liabilities and contract assets acquired in a business combination to be
recognized in accordance with ASC 606, Revenue from Contracts with Customers (“Topic 606”) as if the acquirer had
originated the contracts, subject to certain considerations. As a result, the recognition and measurement of those
contract liabilities and contract assets will likely be comparable to the acquiree’s book value under Topic 606. This
ASU is effective for the Company beginning in the first quarter of 2023 and allows for early adoption upon issuance.
The Company early adopted this standard, and the impact of adoption was not significant to the Company’s
Consolidated Financial Statements.
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Accounting for Income Taxes
On January 1, 2021, the Company adopted and applied ASU 2019-12, Income Taxes (Topic 740): Simplifying the
Accounting for Income Taxes (“Topic 740”) in accordance with the applicable transition methods. Among the various
updates, the Company adopted the accounting for ownership changes when transitioning from equity method to
consolidation on a modified retrospective basis, which resulted in a $19 million adjustment to retained earnings as of
January 1, 2021 for the cumulative effect of derecognizing the deferred tax liability related to the UK acquisition. The
adoption of the remaining components of Topic 740 did not have an impact to the Company’s Consolidated Financial
Statements.
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting, followed by an amendment issued in January 2021. This ASU
temporarily provides optional expedients and exceptions for applying existing guidance to contract modifications,
hedging relationships and other transactions that are expected to be affected by reference rate reform. This ASU, as
amended, was effective upon issuance and will remain in effect for all contract modifications and hedging
relationships entered into through December 31, 2022. The adoption of this ASU along with the related expedients did
not have an impact to the Company’s Consolidated Financial Statements.
3. Acquisitions
Sirius
On December 1, 2021, the Company completed its previously announced acquisition of all issued and outstanding
equity interests of Sirius, as described within Note 1 (Description of Business and Summary of Significant Accounting
Policies). The aggregate consideration paid, net of cash acquired, at the closing of the acquisition was approximately
$2.4 billion, which is subject to the finalization of customary closing adjustments. Transaction costs related to the
acquisition were $35 million, which are included in Selling and administrative expenses for the year ended December
31, 2021. The Company used the net proceeds from the issuance of the $2.5 billion aggregate principal amount of
senior unsecured notes to finance the acquisition and related transaction costs. For additional information on the
issuance of the senior notes, see Note 9 (Debt).
Sirius is a leading provider of secure, mission-critical technology-based solutions and is one of the largest IT solutions
integrators in the United States, leveraging its services-led approach, broad portfolio of hybrid infrastructure solutions,
and deep technical expertise of its 2,600 coworkers to support corporate and public customers. This strategic
acquisition will enhance the Company’s breadth and depth of services and solutions offerings.
Following the close of the acquisition, the Company issued a mix of cash and equity-based retention awards to certain
Sirius coworkers, which vest over a required service period and will be recorded as expense over the required service
period. The results of operations of Sirius are included in the consolidated financial statements of the Company
beginning on the acquisition date. These amounts are presented within the Corporate, Small Business and Public
reportable segments. For the year ended December 31, 2021, the Company’s consolidated financial statements
included $197 million of net sales and $9 million of net income from the results of operations of Sirius.
The acquisition of Sirius has been accounted for as a business combination. The Company is currently assessing the
identification and measurement of the assets acquired and liabilities assumed as of the date of the acquisition. As the
values of certain of these assets and liabilities are preliminary, they are subject to adjustment as additional information
is obtained about the facts and circumstances that existed as of the acquisition date. The valuations will be finalized
within twelve months following the close of the acquisition. When valuations are finalized, any changes to the
preliminary valuation of assets acquired and liabilities assumed may result in adjustments to the preliminary fair value
of the net identifiable assets acquired and goodwill.
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The preliminary purchase price allocation is as follows:
Acquisition-Date Fair
Value
Cash and cash equivalents $ 52.8
Accounts receivable 646.1
Intangible assets, net 1,140.5
Goodwill 1,572.4
Other assets 444.6
Total assets acquired 3,856.4
Accounts payable-trade 643.8
Debt 170.1
Deferred tax liabilities 208.6
Other liabilities 415.6
Total liabilities assumed 1,438.1
Total preliminary purchase price $ 2,418.3
The Company used the income approach to value the intangible assets, consisting of acquired customer relationships
and trade name. The fair value measurements were primarily based on significant inputs that are not observable, which
are categorized as a Level 3 measurement in the fair value hierarchy. Significant inputs used to value these intangible
assets include projection of all future cash flows, long-term growth rates, customer attrition rates, discount rates,
royalty rates and applicable income tax rates. The excess purchase price recorded to goodwill primarily represents the
future economic benefits the Company expects to achieve as a result of combining operations and Sirius’ workforce.
The amount of goodwill expected to be deductible for income tax purposes is estimated to be $160 million. The
Company has preliminarily allocated the goodwill to the reportable segments. For additional information on goodwill
allocation, see Note 6 (Goodwill and Other Intangible Assets).
The table below summarizes the preliminary estimated fair value of identifiable intangible assets acquired.
Useful Lives (Years)
Acquisition-Date Fair
Value
Customer relationships 12 $ 1,090.0
Trade name 3 50.5
$ 1,140.5
The following unaudited pro forma financial information presents the combined results of operations as if the
acquisition of Sirius had been consummated on January 1, 2020. The pro forma adjustments are based on historical
results of operations and financial condition of the Company and Sirius and do not include any anticipated synergies or
other expected benefits of the acquisition. The unaudited pro forma financial information is not necessarily indicative
of the actual consolidated results of operations had the acquisition actually consummated on January 1, 2020, nor are
they indicative of future consolidated results of operations of the combined company.
Year Ended December 31,
2021 2020
Pro forma net sales $ 22,793.0 $ 20,659.0
Pro forma net income $ 977.4 $ 771.1
The pro forma adjustments include, among other things:
• Estimated impact to conform Sirius’ classification to the Company’s financial statement presentation.
• Estimated amortization expense of intangible assets acquired.
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• Estimated compensation expense for the cash and equity retention awards.
• Interest expense for the additional indebtedness incurred to fund the acquisition.
• Transaction costs that have been incurred in connection with the acquisition.
Focal Point Data Risk LLC and certain affiliates (“Focal Point”)
On July 30, 2021, the Company completed the acquisition of Focal Point through a purchase of all issued and
outstanding equity interests. Focal Point is a leading US-based cybersecurity services firm that brings a team skilled in
identity and access management as well as the ability to serve customers across the full cybersecurity landscape. This
strategic acquisition expands the Company’s services and capabilities to help customers address risks posed by
malicious cyber threats and cyber workforce shortages, while helping customers navigate shifting data protection laws.
The acquisition of Focal Point was not material to the Company’s results of operations and financial condition. The
financial results of Focal Point have been included in the Company’s Consolidated Financial Statements since the date
of the acquisition. These amounts are presented within the Public reportable segment and are insignificant during the
year ended December 31, 2021. The purchase price allocation is preliminary and subject to customary closing
adjustments and revision as additional information about fair value of assets and liabilities become available.
Preliminarily, the Company recorded $36 million of intangible assets related to customer relationships.
Amplified IT LLC (“Amplified IT”)
On March 15, 2021, the Company completed the acquisition of Amplified IT through a purchase of all issued and
outstanding membership interests. Amplified IT is a Google Premium education partner and leading provider of
Google Cloud services, solutions and software for education partners. This strategic acquisition expands the
Company’s services and solutions capabilities to help schools leverage technology to achieve greater educational
outcomes. The acquisition of Amplified IT was not material to the Company’s results of operations and financial
condition. The financial results of Amplified IT have been included in the Company’s Consolidated Financial
Statements since the date of the acquisition. These amounts are presented within the Public reportable segment and are
insignificant during the year ended December 31, 2021. The purchase price allocation is preliminary and subject to
customary closing adjustments and revision as additional information about fair value of assets and liabilities become
available. Preliminarily, the Company recorded approximately $88 million of intangible assets, which primarily
consisted of customer relationships.
4. Accounts Receivable and Contract Balances
Accounts Receivable
The timing of revenue recognition may differ from the time of billing to customers. Accounts receivable presented on
the Consolidated Balance Sheets represent an unconditional right to consideration, which includes unbilled
receivables. Unbilled receivables represent revenues that are not currently billable where payment is unconditional and
solely subject to the passage of time. These items are expected to be billed and collected in the normal course of
business. The balance of the Company’s accounts receivable is classified as current for amounts expected to be
collected within twelve months and noncurrent for amounts to be collected beyond twelve months. The following table
details the total accounts receivable recognized and the related classification on the Consolidated Balance Sheets:
December 31,
2021 2020
Accounts receivable, current $ 4,499.4 $ 3,212.6
Accounts receivable, noncurrent 197.4 —
Total accounts receivable $ 4,696.8 $ 3,212.6
(1) Accounts receivable, current are presented within Accounts receivable, net of allowance for credit losses on
the Consolidated Balance Sheets.
(2) Accounts receivable, noncurrent are presented within Other assets on the Consolidated Balance Sheets.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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61
Accounts receivable increased during the year ended December 31, 2021 primarily due to the acquisition of Sirius. For
additional information on the acquisition of Sirius, refer to Note 3 (Acquisitions).
The Company recognizes an allowance for credit losses at inception and reassesses quarterly on a pool basis based on
expected collectability. The following table details the changes in the allowance for credit losses related to accounts
receivable:
Balance as of December 31, 2019 $ 7.9
Increase to provision for credit losses 30.9
Write-offs charged against the allowance for credit losses (10.8)
Other 1.6
Balance as of December 31, 2020 29.6
Decrease to provision for credit losses (5.4)
Write-offs charged against the allowance for credit losses (5.0)
Other 1.2
Balance as of December 31, 2021 $ 20.4
During the year ended December 31, 2021, the Company recognized a $5 million decrease to the provision within the
Corporate and Public segments. While the overall impact and duration of the COVID-19 pandemic remains uncertain,
the Company has observed improved collections for certain pools throughout the year 2021 and loss rates across
certain pools are approaching pre-pandemic levels. The Company’s estimates and assumptions may continue to evolve
as conditions change.
Contract Balances
Contract assets and liabilities represent the difference in the timing of revenue recognition from receipt of cash from
customers. Contract assets represent revenue recognized on performance obligations satisfied or partially satisfied for
which the Company has no unconditional right to consideration. Contract liabilities consist of payments received from
customers, or such consideration that is contractually due, in advance of providing the product or performing services.
The following table details information about the Company’s contract balances recognized on the Consolidated
Balance Sheets:
December 31,
2021 2020
Contract assets
(1)
$ 134.7 $ 39.1
Contract liabilities
(2)(3)
$ 423.3 $ 255.3
(1) Contract assets are presented within Prepaid expenses and other on the Consolidated Balance Sheets.
(2) Includes $20 million and $12 million of long-term contract liabilities that are presented within Other
liabilities on the Consolidated Balance Sheets as of December 31, 2021 and 2020, respectively.
(3) For the years ended December 31, 2021 and 2020, the Company recognized revenue of $171 million and
$203 million, respectively, related to its contract liabilities that were included in the beginning balance of the
respective periods.
Contract assets and contract liabilities increased $96 million and $168 million, respectively, primarily due to the
acquisition of Sirius.
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62
A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or
as, the performance obligation is satisfied. For additional information regarding the Company’s performance
obligations, see Note 1 (Description of Business and Summary of Significant Accounting Policies). The following
table represents the total transaction price for the remaining performance obligations as of December 31, 2021 related
to non-cancelable contracts longer than 12 months in duration that is expected to be recognized over future periods.
Within 1 Year Years 1-2 Years 2-3 Thereafter
Remaining performance obligations $ 57.2 $ 26.3 $ 7.5 $ 2.8
5. Property and Equipment
Property and equipment consist of the following:
December 31,
Useful Lives (Years) 2021 2020
Computer and data processing equipment
3 - 5 $ 162.1 $ 126.5
Building and leasehold improvements
5 - 25 151.3 126.8
Machinery and equipment
5 - 10 44.4 43.3
Computer software
3 - 5 32.9 22.9
Furniture and fixtures
5 - 10 31.0 21.2
Land
-* 27.7 27.7
Construction in progress
-* 12.0 50.8
Property and equipment, gross
461.4 419.2
Less: accumulated depreciation
(265.6) (243.7)
Property and equipment, net
$ 195.8 $ 175.5
*Asset is not depreciated.
During 2021, 2020 and 2019, the Company recorded disposals of $20 million, $54 million and $3 million,
respectively, to derecognize Property and equipment that were no longer in use.
Depreciation expense for the years ended December 31, 2021, 2020, and 2019 was $42 million, $213 million and $41
million, respectively.
6. Goodwill and Other Intangible Assets
Goodwill
The changes in goodwill by reportable segment are as follows:
Corporate
Small
Business Public Other
(1)
Consolidated
Balances as of December 31, 2019
(2)
$ 1,090.6 $ 185.9 $ 929.6 $ 346.9 $ 2,553.0
IGNW, Inc. acquisition
33.0 — — — 33.0
Foreign currency translation
— — — 9.9 9.9
Balances as of December 31, 2020
(2)
1,123.6 185.9 929.6 356.8 2,595.9
Amplified IT acquisition
(3)
— — 133.8 — 133.8
Focal Point acquisition
(3)
— — 82.7 — 82.7
Sirius acquisition
(3)
900.6 80.2 591.6 — 1,572.4
Other acquisition adjustments
0.2 — — — 0.2
Foreign currency translation
— — — (2.1) (2.1)
Balances as of December 31, 2021
(2)
$ 2,024.4 $ 266.1 $ 1,737.7 $ 354.7 $ 4,382.9
(1) Other is comprised of CDW UK and CDW Canada operating segments.
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63
(2) Goodwill is net of accumulated impairment losses of $1,571 million, $354 million and $28 million related to
the Corporate, Public and Other segments, respectively, recorded in 2008 and 2009.
(3) For additional information regarding the Company’s acquisitions, see Note 3 (Acquisitions).
Other Intangible Assets
A summary of intangible assets is as follows:
December 31, 2021 Useful Lives (Years)
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Customer relationships
3 - 14 $ 3,330.9 $ (1,987.8) $ 1,343.1
Trade name
1 - 20 472.7 (302.0) 170.7
Internally developed software
3 - 5 352.0 (239.8) 112.2
Other
1 - 10 2.5 (0.4) 2.1
Total
$ 4,158.1 $ (2,530.0) $ 1,628.1
December 31, 2020
Customer relationships
3 - 14 $ 2,131.5 $ (1,927.9) $ 203.6
Trade name
1 - 20 422.8 (280.1) 142.7
Internally developed software
3 - 5 280.6 (186.0) 94.6
Other
1 - 10 9.6 (5.4) 4.2
Total
$ 2,844.5 $ (2,399.4) $ 445.1
During the years ended December 31, 2021, 2020 and 2019, the Company recorded disposals of $2 million, $25
million and $11 million, respectively, to remove fully amortized intangible assets that were no longer in use.
During the years ended December 31, 2021, 2020 and 2019, the Company recorded amortization expense related to
intangible assets of $149 million, $212 million and $219 million, respectively.
Estimated future amortization expense related to intangible assets is as follows:
Years ending December 31,
Estimated Future
Amortization Expense
2022
$ 218.7
2023
197.9
2024
178.1
2025
149.9
2026
147.9
Thereafter
735.6
Total future amortization expense
$ 1,628.1
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64
7. Inventory Financing Agreements
The Company has entered into agreements with certain financial intermediaries to facilitate the purchase of inventory
from various suppliers under certain terms and conditions, as described below. These amounts are classified separately
as Accounts payable-inventory financing on the Consolidated Balance Sheets. The Company does not incur any
interest expense associated with these agreements as balances are paid when they are due.
Amounts included in accounts payable-inventory financing are as follows:
December 31,
2021 2020
Revolving Loan inventory financing agreement
(1)
$ 310.1 $ 470.1
Other inventory financing agreements 138.2 54.5
Accounts payable-inventory financing $ 448.3 $ 524.6
(1) The revolving credit facilities include an inventory floorplan sub-facility that enables the Company to
maintain an inventory financing agreement with a financial intermediary.
8. Financial Instruments
The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The
Company’s indebtedness creates interest rate risk on its variable-rate debt. The Company uses derivative financial
instruments to manage its exposure to interest rate risk.
The Company has interest rate cap agreements that entitle it to payments from the counterparty of the amount, if any,
by which three-month London Interbank Offered Rate (“LIBOR”) exceeds the strike rates of the caps during the
agreement period in exchange for an upfront premium. During 2021, the Company did not enter into new interest rate
cap agreements.
As of December 31, 2021 and December 31, 2020, the Company had interest rate cap agreements with a fair value of
less than $1 million which were classified within Other assets on the Consolidated Balance Sheets. The total notional
value of the interest rate cap agreements was $1.3 billion and $1.4 billion as of December 31, 2021 and December 31,
2020, respectively, of which $100 million matured on December 31, 2021 and $1.3 billion will mature on December
31, 2022.
The fair value of the Company’s interest rate cap agreements is classified as Level 2 in the fair value hierarchy. The
valuation of the interest rate cap agreements is derived by using a discounted cash flow analysis on the expected cash
receipts that would occur if variable interest rates rise above the strike rates of the caps. This analysis reflects the
contractual terms of the interest rate cap agreements, including the period to maturity, and uses observable market-
based inputs, including LIBOR curves and implied volatilities. The Company also incorporates insignificant credit
valuation adjustments to appropriately reflect the respective counterparty’s nonperformance risk in the fair value
measurements. The counterparty credit spreads are based on publicly available credit information obtained from a
third-party credit data provider. For additional information, see Note 9 (Debt).
The interest rate cap agreements are designated as cash flow hedges. The changes in the fair value of derivatives that
qualify as cash flow hedges are recorded in Accumulated other comprehensive loss (“AOCL”) and are subsequently
reclassified into Interest expense in the period when the hedged forecasted transaction affects earnings. The following
tables provide the activity in AOCL, net of tax, for the years ended December 31, 2021, 2020 and 2019.
Year Ended December 31,
2021 2020 2019
Change in fair value recorded to AOCL $ — $ (0.6) $ (11.3)
Reclassification from AOCL to Interest expense, net $ 2.5 $ 6.0 $ 1.7
The Company expects to reclassify $5 million from Accumulated other comprehensive loss into Interest expense, net
during the next 12 months.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
65
9. Debt
As of December 31, 2021 As of December 31, 2020
Maturity Date Interest Rate Amount Interest Rate Amount
Credit Facility
Senior unsecured revolving loan facility December 2026 Variable $ 316.4 Variable $ —
Term Loans
CDW UK term loan March 2021 — % — 1.445 % 56.0
Senior unsecured term loan facility December 2026 Variable 1,420.0 — % —
Senior secured term loan facility December 2021 — % — 1.900 % 1,423.4
Total term loans 1,420.0 1,479.4
Unsecured Senior Notes
Senior notes due 2024 December 2024 5.500 % 575.0 5.500 % 575.0
Senior notes due 2025 May 2025 4.125 % 600.0 4.125 % 600.0
Senior notes due 2028 April 2028 4.250 % 600.0 4.250 % 600.0
Senior notes due 2029 February 2029 3.250 % 700.0 3.250 % 700.0
Senior notes due 2026 December 2026 2.670 % 1,000.0 — % —
Senior notes due 2028 December 2028 3.276 % 500.0 — % —
Senior notes due 2031 December 2031 3.569 % 1,000.0 — % —
Total unsecured senior notes 4,975.0 2,475.0
Receivable financing liability 179.5 —
Other long-term obligations 13.6 —
Unamortized deferred financing fees (46.0) (27.2)
Current maturities of long-term debt (102.7) (70.9)
Total long-term debt $ 6,755.8 $ 3,856.3
As of December 31, 2021, the Company is in compliance with the covenants under its credit agreements and
indentures.
Credit Facility
The Company has a variable rate senior unsecured revolving loan facility (the “Revolving Loan Facility”) from which
it may draw tranches denominated in US dollars, British pounds or Euros. The interest rate is based on LIBOR plus a
margin or an alternate base rate plus a margin, where the margin is based on the Company’s senior unsecured rating.
The Revolving Loan Facility is used by the Company for borrowings, issuances of letters of credit and floorplan
financing. As of December 31, 2021, the Company could have borrowed up to an additional $1.0 billion under the
Revolving Loan Facility. As of December 31, 2021, the Revolving Loan Facility had less than $1 million of undrawn
letters of credit and $296 million reserved for the floorplan sub-facility.
Term Loan
The senior unsecured term loan facility (the “Term Loan Facility”) has a variable interest rate, which has effectively
been capped through the use of interest rate caps. The interest rate is based on LIBOR plus a margin, where the margin
is determined by the Company’s senior unsecured credit rating. The Company is required to pay quarterly principal
installments of $9 million in 2022 and of $18 million in 2023 and thereafter, with the remaining principal amount due
at the maturity date.
Unsecured Senior Notes
The senior notes have a fixed interest rate, which is paid semi-annually.
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(dollars in millions, except per share data, unless otherwise noted)
66
Receivable Financing
The majority of the receivable financing liabilities were assumed in connection with the acquisition of Sirius, which
had a balance of $160 million as of December 31, 2021. Such amounts relate to pre-acquisition transfers of certain
accounts receivable to third-party financing companies that did not qualify as a sale under the terms of the agreement.
While the terms of such agreements are on a nonrecourse basis, the transfers of accounts receivable could not achieve
certain criteria that would allow derecognition of the accounts receivable. The proceeds from these arrangements are
recognized as a liability and the associated accounts receivable remains on the Consolidated Balance Sheet until the
liability is settled.
Debt Issuances and Extinguishments
In connection with the execution of the Purchase Agreement to acquire Sirius, on October 15, 2021, the Company
entered into a commitment letter for a $2.5 billion senior unsecured 364-day bridge loan facility (“Bridge Facility”),
which would have been used in the event permanent financing was not obtained on or before completing the
acquisition of Sirius. In lieu of borrowing under the Bridge Facility, on December 1, 2021, the Company obtained
permanent financing through the issuance of $1.0 billion aggregate principal amount of 2.670% Senior Notes due
2026, $500 million aggregate principal amount of 3.276% Senior Notes due 2028 and $1.0 billion aggregate principal
amount of 3.569% Senior Notes due 2031. Interest on each note is payable semi-annually on June 1 and December 1
of each year, and payments commence on June 1, 2022. The net proceeds from the issuance were used to fund the
Sirius acquisition and related transaction costs. The Bridge Facility was automatically terminated upon completing the
acquisition of Sirius without using the Bridge Facility.
Also on December 1, 2021, the Company entered into the Revolving Loan Facility, a new five-year $1.6 billion senior
unsecured revolving loan facility. The Revolving Loan Facility replaced the senior secured asset-based revolving
credit facility (the “ABL Facility”). On the same date, the Company also entered into the Term Loan Facility, a new
five-year $1.4 billion senior unsecured term loan facility. The Term Loan Facility replaced the senior secured term
loan facility. The net loss recognized on extinguishment of the senior secured facilities was insignificant for the year
ended December 31, 2021.
On March 26, 2021, the Company amended, extended and increased the size of the ABL Facility, prior to its
extinguishment on December 1, 2021. On the same day, the Company early extinguished the remaining principal
amount on the CDW UK term loan by drawing on the ABL Facility. The net loss recognized on extinguishment of
CDW UK term loan was insignificant for the year ended December 31, 2021.
On August 13, 2020, the Company completed the issuance of $700 million aggregate principal amount of 3.250%
Senior Notes due 2029 at par (“2029 Senior Notes”). Interest on the 2029 Senior Notes is payable semi-annually on
February 15 and August 15 of each year, and payments commenced on February 15, 2021. The net proceeds from the
issuance were primarily used to redeem all of the remaining $600 million aggregate principal amount of the 5.000%
Senior Notes due September 2025 at a redemption price of 103.75% of the principal amount redeemed, plus accrued
and unpaid interest to the date of redemption, to pay fees and expenses related to the issuance and redemption, and for
general corporate purposes.
On April 21, 2020, the Company completed the issuance of $600 million aggregate principal amount of 4.125% Senior
Notes due 2025 at par (“2025 Senior Notes”). Interest on the 2025 Senior Notes is payable semi-annually on May 1
and November 1 of each year, and payments commenced on November 1, 2020.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
67
Total Debt Maturities
A summary of total debt maturities is as follows:
Years ending December 31, Debt Maturities
2022
$ 102.7
2023
131.0
2024
689.3
2025
693.4
2026
2,488.1
Thereafter
2,800.0
Total debt maturities
$ 6,904.5
Fair Value
The fair values of the Senior Notes were estimated using quoted market prices for identical liabilities that are traded in
over-the-counter secondary markets. The fair value of the Term Loan was estimated using dealer quotes for identical
liabilities in markets that are not considered active. The Senior Notes and Term Loan were classified as Level 2 within
the fair value hierarchy. The carrying value of the Revolving Loan approximates fair value.
The approximate fair values and related carrying values of the Company’s long-term debt, including current maturities
and excluding unamortized discount and unamortized deferred financing costs, were as follows:
December 31,
2021 2020
Fair value $ 6,996.0 $ 4,077.9
Carrying value 6,904.5 3,954.4
10. Income Taxes
Income before income taxes was taxed under the following jurisdictions:
Year Ended December 31,
2021 2020 2019
Domestic
$ 1,186.7 $ 934.3 $ 854.1
Foreign
111.1 68.0 95.6
Total
$ 1,297.8 $ 1,002.3 $ 949.7
Components of Income tax expense (benefit) consist of the following:
Year Ended December 31,
2021 2020 2019
Current:
Federal
$ 235.6 $ 166.5 $ 224.7
State
52.9 49.2 56.1
Foreign
27.4 18.3 20
Total current
315.9 234.0 300.8
Deferred:
Domestic
(8.7) (18.8) (83.0)
Foreign
2.0 (1.4) (4.9)
Total deferred
(6.7) (20.2) (87.9)
Income tax expense
$ 309.2 $ 213.8 $ 212.9
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
68
The reconciliation between the statutory tax rate expressed as a percentage of income before income taxes and the
effective tax rate was as follows:
Year Ended December 31,
2021 2020 2019
Statutory federal income tax rate
$ 272.5 21.0 % $ 210.5 21.0 % $ 199.4 21.0 %
State taxes, net of federal effect
50.3 3.9 36.0 3.6 35.4 3.7
Excess tax benefit of equity awards
(30.1) (2.3) (28.8) (2.9) (26.8) (2.8)
Tax on foreign earnings
1.7 0.1 1.0 0.1 2.1 0.2
Effect of tax law changes
4.8 0.4 (6.8) (0.7) — —
Other
10.0 0.7 1.9 0.2 2.8 0.3
Effective tax rate
$ 309.2 23.8 % $ 213.8 21.3 % $ 212.9 22.4 %
The tax effect of temporary differences that give rise to net deferred income tax liabilities is presented below.
Reclassifications have been made to conform to current year presentation.
December 31,
2021 2020
Deferred tax assets:
Contract liabilities $ 45.3 $ 13.2
Equity compensation plans 22.7 20.1
Net operating loss and credit carryforwards, net 28.9 22.9
Payroll and benefits 37.6 21.8
Operating lease liabilities 51.6 47.5
Accounts receivable 18.0 26.0
Other 20.5 15.9
Total deferred tax assets 224.6 167.4
Deferred tax liabilities:
Acquisition-related intangibles 322.2 76.5
Property and equipment 47.6 39.9
International investments — 19.2
Operating lease right-of-use assets 35.6 32.5
Other 26.5 23.3
Total deferred tax liabilities 431.9 191.4
Deferred tax asset valuation allowance 17.0 16.9
Net deferred tax liabilities $ 224.3 $ 40.9
The Company has income tax net operating losses and other carryforwards of $39 million that do not expire and state
and international tax credit carryforwards of $20 million, which expire at various dates from 2026 through 2027.
The Company is indefinitely reinvested in its UK business, and therefore will not provide for any US deferred taxes on
the earnings of the UK business. The Company is not permanently reinvested in its Canadian business and therefore
has recognized deferred tax liabilities of $2 million as of December 31, 2021 related to Canada withholding taxes on
earnings of its Canadian business.
In the ordinary course of business, the Company is subject to review by domestic and foreign taxing authorities,
including the Internal Revenue Service (“IRS”). In general, the Company is no longer subject to audit by the IRS or
state, local, or foreign taxing authorities for tax years through 2014. Various taxing authorities are in the process of
auditing income tax returns of the Company and its subsidiaries. The Company does not anticipate that any
adjustments from the audits would have a material impact on its Consolidated Financial Statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
69
Changes in the Company’s unrecognized tax benefits as of December 31, 2021, 2020 and 2019 were as follows:
Year Ended December 31,
2021 2020 2019
Balance as of January 1
$ 18.3 $ 17.7 $ 15.1
Additions for tax positions related to current year
0.1 0.1 2.6
Additions for tax positions related to prior year
— 0.5 —
Balance as of December 31
$ 18.4 $ 18.3 $ 17.7
As of December 31, 2021, the Company had $18 million of unrecognized tax benefits that, if recognized, would have
decreased income taxes and the corresponding effective income tax rate and increased net income. The impact of
recognizing these tax benefits, net of the federal income tax benefit related to unrecognized state income tax benefits,
would be approximately $15 million.
11. Leases
The Company has operating leases primarily for real estate, data centers and equipment. Remaining lease terms range
from 1 to 15 years.
Supplemental Consolidated Balance Sheets information related to the Company’s operating leases is as follows:
December 31,
Classification on the Consolidated Balance Sheets 2021 2020
Assets
Operating lease right-of-use assets $ 155.6 $ 130.8
Liabilities
Current Accrued expenses and other current liabilities - Other $ 31.7 $ 25.6
Long-term Long-term operating lease liabilities 184.2 169.0
Total lease liabilities $ 215.9 $ 194.6
December 31,
Lease term and discount rate 2021 2020
Weighted average remaining lease term (years) 9.0 10.3
Weighted average discount rate 3.81 % 3.98 %
Operating lease expense for the years ended December 31, 2021, 2020 and 2019 was $50 million, $53 million and $93
million, respectively.
Maturities of operating lease liabilities are as follows:
December 31, 2021
2022 $ 39.4
2023 34.3
2024 28.9
2025 27.4
2026 24.1
Thereafter 106.3
Total lease payments $ 260.4
Less: Interest (44.5)
Present value of lease liabilities $ 215.9
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70
Supplemental cash flow information related to operating leases is as follows:
Year Ended December 31,
2021 2020 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases $ 35.9 $ 35.8 $ 88.0
Right-of-use assets obtained in exchange for lease obligations
Operating leases
(1)
$ 49.8 $ 26.7 $ 110.2
(1) In 2021, primarily includes right-of-use assets acquired as a result of the Sirius acquisition.
12. Stockholders’ Equity
Share Repurchase Program
The Company has a share repurchase program under which it may repurchase shares of its common stock in the open
market or through privately negotiated other transactions, depending on share price, market conditions and other
factors. The share repurchase program does not obligate the Company to repurchase any dollar amount or number of
shares, and repurchases may be commenced or suspended from time to time without prior notice.
During 2021, the Company repurchased 8.7 million shares of its common stock for $1,500 million. These repurchases
occurred under the programs announced on February 7, 2019 and February 10, 2021 by which the Company’s Board
of Directors authorized an increase to the Company’s share repurchase program by $1.0 billion and $1.25 billion,
respectively. As of December 31, 2021, the Company has $88 million remaining under this program.
13. Equity-Based Compensation
Equity-based compensation expense, which is recorded in Selling and administrative expenses in the Consolidated
Statements of Operations was as follows:
Year Ended December 31,
2021 2020 2019
Equity-based compensation expense
$ 72.6 $ 42.5 $ 48.5
Income tax benefit
(1)
(12.2) (7.7) (9.8)
Equity-based compensation expense, net of tax
$ 60.4 $ 34.8 $ 38.7
(1) Represents equity-based compensation tax expense at the statutory tax rates. Excess tax benefits associated
with equity awards are excluded from this disclosure and separately disclosed in Note 10 (Income Taxes).
The total unrecognized compensation cost related to non-vested awards was $111 million as of December 31, 2021
and is expected to be recognized over a weighted-average period of 2.1 years.
2021 Long-Term Incentive Plan
During May 2021, the Company adopted the 2021 Long-Term Incentive Plan (“2021 LTIP”), which replaced the
former 2013 Long-Term Incentive Plan in connection with the issuance of new equity awards (“2013 LTIP” and,
together with the 2021 LTIP, the “LTIPs”). The 2021 LTIP provides for the grant of incentive stock options,
nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, bonus stock and
performance awards. The 2021 LTIP allows the Company to grant 6.6 million new shares of the Company’s common
stock in addition to the number of shares that remained available for issuance under the 2013 LTIP, and undelivered
shares subject to outstanding awards granted under the 2013 LTIP that become available for future awards under the
2021 LTIP. As of December 31, 2021, 8.1 million shares were available for issuance under the 2021 LTIP. Authorized
but unissued shares are reserved for issuance in connection with equity-based awards.
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CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
71
Stock Options
The exercise price of a stock option granted is equal to the fair value of the underlying stock on the date of the grant.
Stock options granted under the LTIPs have a contractual term of ten years and generally vest ratably over three years.
To estimate the fair value of options granted, the Company uses the Black-Scholes option pricing model. The
weighted-average assumptions used to value the stock options granted were as follows:
Year Ended December 31,
2021 2020 2019
Grant date fair value
$ 40.83 $ 20.46 $ 19.26
Volatility
(1)
30.00 % 25.50 % 20.00 %
Risk-free rate
(2)
0.93 % 0.51 % 2.53 %
Expected dividend yield
1.03 % 1.52 % 1.23 %
Expected term (in years)
(3)
5.6 6.0 6.0
(1) Based upon an assessment of the two-year and five-year historical and implied volatility for the Company’s
selected peer group, adjusted for the Company’s leverage.
(2) Based on a composite US Treasury rate.
(3) Based on contractual term length and on historical experience of both exercised and unexercised options.
Stock option activity for the year ended December 31, 2021 was as follows:
Options
Number of
Options
Weighted-
Average
Exercise Price
Weighted-Average
Remaining
Contractual Term
(years)
Aggregate
Intrinsic Value
Outstanding at January 1, 2021 3,965,452 $ 73.71
Granted 545,359 156.30
Forfeited/Expired (58,446) 109.68
Exercised
(1)
(1,097,099) 63.76
Outstanding at December 31, 2021 3,355,266 $ 89.76 6.66 $ 385.9
Vested and exercisable at December 31, 2021 1,959,076 $ 66.97 5.45 $ 270.0
Expected to vest after December 31, 2021 1,377,326 $ 121.56 8.35 $ 114.6
(1) The total intrinsic value of stock options exercised during the years ended December 31, 2021, 2020 and 2019
was $117 million, $94 million and $83 million, respectively.
Restricted Stock Units (“RSUs”)
Restricted stock units represent the right to receive unrestricted shares of the Company’s stock at the time of vesting.
RSUs granted under the LTIPs vest either ratably over three years or cliff-vest at the end of three years. The fair value
of RSUs is equal to the closing price of the Company’s common stock on date of grant.
RSU activity for the year ended December 31, 2021 was as follows:
Number of Units
Weighted-Average
Grant-Date Fair
Value
Non-vested at January 1, 2021 92,436 $ 107.88
Granted
(1)
373,530 172.96
Vested
(2)
(20,340) 101.06
Forfeited (8,102) 160.90
Non-vested at December 31, 2021 437,524 $ 163.82
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
72
(1) The weighted-average grant date fair value of RSUs granted during the years ended December 31, 2021, 2020
and 2019 was $172.96, $112.55 and $103.24, respectively.
(2) The aggregate fair value of RSUs that vested during the years ended December 31, 2021, 2020 and 2019 was
$2 million, $12 million and $4 million, respectively.
Performance Share Units (“PSUs”)
Performance share units represent the right to receive unrestricted shares of the Company’s stock at the time of
vesting. PSUs granted under the LTIPs cliff-vest at the end of three years. The percentage of PSUs that shall vest will
range from 0% to 200% of the number of PSUs granted based on the Company’s performance against a cumulative
adjusted free cash flow measure and cumulative non-GAAP net income per diluted share measure over a three-year
performance period.
PSU activity for the year ended December 31, 2021 was as follows:
Number of Units
Weighted-Average
Grant-Date Fair
Value
Non-vested at January 1, 2021 421,164 $ 102.07
Granted
(1)
147,133 154.37
Attainment adjustment
(2)
163,807 73.68
Vested
(3)
(324,323) 86.17
Forfeited (20,577) 105.34
Non-vested at December 31, 2021 387,204 $ 123.05
(1) The weighted-average grant date fair value of PSUs granted during the years ended December 31, 2021, 2020
and 2019 was $154.37, $102.96 and $101.33, respectively.
(2) During the year ended December 31, 2021, the attainment on PSUs vested at December 31, 2020 was
adjusted to reflect actual performance.
(3) The aggregate fair value of PSUs that vested during the years ended December 31, 2021, 2020 and 2019 was
$28 million, $24 million and $18 million, respectively.
14. Earnings Per Share
The numerator for both basic and diluted earnings per share is Net income. The denominator for basic earnings per
share is the weighted-average shares outstanding during the period.
A reconciliation of basic weighted-average shares outstanding to diluted weighted-average shares outstanding is as
follows:
Year Ended December 31,
2021 2020 2019
Basic weighted-average shares outstanding 138.5 142.6 145.1
Effect of dilutive securities
(1)
2.0 2.2 2.7
Diluted weighted-average shares outstanding
(2)
140.5 144.8 147.8
(1) The dilutive effect of outstanding stock options, restricted stock units, performance share units and Coworker
Stock Purchase Plan (“CSPP”) units is reflected in the diluted weighted-average shares outstanding using the
treasury stock method.
(2) There were fewer than 0.1 million potential common shares excluded from diluted weighted-average shares
outstanding for the years ended December 31, 2021, 2020 and 2019, respectively, as their inclusion would
have had an anti-dilutive effect.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
73
15. Coworker Retirement and Other Compensation Benefits
Profit Sharing Plan and Other Savings Plans
The Company has a profit-sharing plan that includes a salary reduction feature established under the Internal Revenue
Code Section 401(k) covering substantially all coworkers in the US. In addition, coworkers outside the US participate
in other savings plans. Company contributions to the profit sharing and other savings plans are made in cash and
determined at the discretion of the Board of Directors. For the years ended December 31, 2021, 2020 and 2019, the
amounts expensed for these plans were $46 million, $28 million and $38 million, respectively.
CSPP
The Company has a CSPP that provides the opportunity for eligible coworkers to acquire shares of the Company’s
common stock at a 5% discount from the closing market price on the final day of the offering period. There is no
compensation expense associated with the CSPP.
16. Commitments and Contingencies
The Company is party to various legal proceedings that arise in the ordinary course of its business, which include
commercial, intellectual property, employment, tort and other litigation matters. The Company is also subject to audit
by federal, state, international, national, provincial and local authorities, and by various partners, group purchasing
organizations and customers, including government agencies, relating to purchases and sales under various contracts.
In addition, the Company is subject to indemnification claims under various contracts. From time to time, certain
customers of the Company file voluntary petitions for reorganization or liquidation under the US bankruptcy laws or
similar laws of the jurisdictions for the Company’s business activities outside of the US. In such cases, certain pre-
petition payments received by the Company could be considered preference items and subject to return to the
bankruptcy administrator.
As of December 31, 2021, the Company does not believe that there is a reasonable possibility that any material loss
exceeding the amounts already recognized for these proceedings and matters, if any, has been incurred. However, the
ultimate resolutions of these proceedings and matters are inherently unpredictable. As such, the Company’s
consolidated financial statements could be adversely affected in any particular period by the unfavorable resolution of
one or more of these proceedings or matters.
A subsidiary of the Company received a Civil Investigative Demand dated September 20, 2021 from the Department
of Justice (“DOJ”) in connection with a False Claims Act Investigation. The DOJ has requested information related to
teaming agreements with OEMs. The Company is cooperating with the request and, given the early stage of the matter,
the Company is currently unable to assess the probability of any outcome or the range of possible loss, if any.
17. Segment Information
The Company’s segment information reflects the way the chief operating decision maker uses internal reporting to
evaluate business performance, allocate resources and manage operations.
The Company has three reportable segments: Corporate, which is comprised primarily of private sector business
customers with more than 250 employees in the US, Small Business, primarily servicing private sector business
customers with up to 250 employees in the US, and Public, which is comprised of government agencies and education
and healthcare institutions in the US. The Company has two other operating segments: CDW UK and CDW Canada,
both of which do not meet the reportable segment quantitative thresholds and, accordingly, are included in an all other
category (“Other”).
The Company has centralized logistics and headquarters functions that provide services to the segments. The logistics
function includes purchasing, distribution and fulfillment services to support the Corporate, Small Business and Public
segments. As a result, costs and intercompany charges associated with the logistics function are fully allocated to all of
these segments based on a percent of Net sales. The centralized headquarters function provides services in areas such
as accounting, information technology, marketing, legal and coworker services. Headquarters function costs that are
not allocated to the segments are included under the heading of “Headquarters” in the tables below.
Segment information for Total assets and capital expenditures is not presented, as such information is not used in
measuring segment performance or allocating resources between segments.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
74
The segment information presented below includes the results of operations from Sirius since its acquisition on
December 1, 2021.
Selected Segment Financial Information
Information about the Company’s segments for the years ended December 31, 2021, 2020 and 2019 is as follows:
Corporate
Small
Business Public Other Headquarters Total
2021:
Net sales
$ 8,179.7 $ 1,870.1 $ 8,183.6 $ 2,587.4 $ — $ 20,820.8
Operating income (loss)
697.3 167.7 606.7 115.8 (168.5) 1,419.0
Depreciation and amortization expense
(22.9) (4.1) (57.2) (34.4) (72.6) (191.2)
2020:
Net sales
$ 6,846.0 $ 1,397.1 $ 8,137.7 $ 2,086.7 $ — $ 18,467.5
Operating income (loss)
489.5 99.0 678.2 65.9 (153.4) 1,179.2
Depreciation and amortization expense
(73.2) (18.3) (229.7) (32.5) (71.9) (425.6)
2019:
Net sales
$ 7,499.0 $ 1,510.3 $ 6,864.8 $ 2,158.3 $ — $ 18,032.4
Operating income (loss)
585.1 107.5 475.0 101.6 (135.6) 1,133.6
Depreciation and amortization expense
(86.9) (22.5) (56.3) (31.2) (70.2) (267.1)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
75
Geographic Areas and Revenue Mix
Year Ended December 31, 2021
Corporate Small Business Public Other Total
Geography
(1)
United States $ 8,165.4 $ 1,870.1 $ 8,183.6 $ 19.7 $ 18,238.8
Rest of World 14.3 — — 2,567.7 2,582.0
Total Net sales
8,179.7 1,870.1 8,183.6 2,587.4 20,820.8
Major Product and Services
Hardware 6,427.9 1,587.9 6,827.1 1,926.7 16,769.6
Software 1,172.4 211.0 1,017.3 401.7 2,802.4
Services 510.1 49.1 321.5 245.4 1,126.1
Other
(2)
69.3 22.1 17.7 13.6 122.7
Total Net sales
8,179.7 1,870.1 8,183.6 2,587.4 20,820.8
Sales by Channel
Corporate
8,179.7 — — — 8,179.7
Small Business
— 1,870.1 — — 1,870.1
Government
— — 2,155.6 — 2,155.6
Education
— — 4,108.7 — 4,108.7
Healthcare
— — 1,919.3 — 1,919.3
Other
— — — 2,587.4 2,587.4
Total Net sales
8,179.7 1,870.1 8,183.6 2,587.4 20,820.8
Timing of Revenue Recognition
Transferred at a point in time where
CDW is principal 7,332.3 1,734.7 7,634.3 2,288.7 18,990.0
Transferred at a point in time where
CDW is agent 517.5 112.3 336.6 83.2 1,049.6
Transferred over time where CDW is
principal 329.9 23.1 212.7 215.5 781.2
Total Net sales
$ 8,179.7 $ 1,870.1 $ 8,183.6 $ 2,587.4 $ 20,820.8
(1) Net sales by geography is generally based on the ship-to address with the exception of certain services that
may be performed at, or on behalf of, multiple locations. Such service arrangements are categorized based on
the bill-to address.
(2) Includes items such as delivery charges to customers.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
76
Year Ended December 31, 2020
Corporate Small Business Public Other Total
Geography
(1)
United States $ 6,823.6 $ 1,397.1 $ 8,137.7 $ 20.8 $ 16,379.2
Rest of World 22.4 — — 2,065.9 2,088.3
Total Net sales
6,846.0 1,397.1 8,137.7 2,086.7 18,467.5
Major Product and Services
Hardware 5,289.2 1,156.1 6,844.0 1,544.1 14,833.4
Software 1,088.3 189.3 982.8 320.6 2,581.0
Services 400.8 31.5 269.8 211.8 913.9
Other
(2)
67.7 20.2 41.1 10.2 139.2
Total Net sales 6,846.0 1,397.1 8,137.7 2,086.7 18,467.5
Sales by Channel
Corporate
6,846.0 — — — 6,846.0
Small Business
— 1,397.1 — — 1,397.1
Government
— — 2,978.5 — 2,978.5
Education
— — 3,458.1 — 3,458.1
Healthcare
— — 1,701.1 — 1,701.1
Other
— — — 2,086.7 2,086.7
Total Net sales
6,846.0 1,397.1 8,137.7 2,086.7 18,467.5
Timing of Revenue Recognition
Transferred at a point in time where
CDW is principal 6,140.7 1,301.3 7,477.4 1,835.5 16,754.9
Transferred at a point in time where
CDW is agent 457.4 84.5 292.5 61.6 896.0
Transferred over time where CDW is
principal 247.9 11.3 367.8 189.6 816.6
Total Net sales
$ 6,846.0 $ 1,397.1 $ 8,137.7 $ 2,086.7 $ 18,467.5
(1) Net sales by geography is generally based on the ship-to address with the exception of certain services that
may be performed at, or on behalf of, multiple locations. Such service arrangements are categorized based on
the bill-to address.
(2) Includes items such as delivery charges to customers.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
77
Year Ended December 31, 2019
Corporate Small Business Public Other Total
Geography
(1)
United States $ 7,485.7 $ 1,510.3 $ 6,864.8 $ 32.5 $ 15,893.3
Rest of World 13.3 — — 2,125.8 2,139.1
Total Net sales 7,499.0 1,510.3 6,864.8 2,158.3 18,032.4
Major Product and Services
Hardware 5,963.7 1,264.7 5,624.9 1,628.9 14,482.2
Software 1,069.2 196.0 1,019.6 300.2 2,585.0
Services 395.8 28.5 199.0 217.6 840.9
Other
(2)
70.3 21.1 21.3 11.6 124.3
Total Net sales 7,499.0 1,510.3 6,864.8 2,158.3 18,032.4
Sales by Channel
Corporate
7,499.0 — — — 7,499.0
Small Business
— 1,510.3 — — 1,510.3
Government
— — 2,519.3 — 2,519.3
Education
— — 2,411.6 — 2,411.6
Healthcare
— — 1,933.9 — 1,933.9
Other
— — — 2,158.3 2,158.3
Total Net sales
7,499.0 1,510.3 6,864.8 2,158.3 18,032.4
Timing of Revenue Recognition
Transferred at a point in time where
CDW is principal 6,818.7 1,423.1 6,410.2 1,900.6 16,552.6
Transferred at a point in time where
CDW is agent 446.1 80.0 248.5 59.6 834.2
Transferred over time where CDW is
principal 234.2 7.2 206.1 198.1 645.6
Total Net sales
$ 7,499.0 $ 1,510.3 $ 6,864.8 $ 2,158.3 $ 18,032.4
(1) Net sales by geography is generally based on the ship-to address with the exception of certain services that
may be performed at, or on behalf of, multiple locations. Such service arrangements are categorized based on
the bill-to address.
(2) Includes items such as delivery charges to customers.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
78
The following table presents Net sales by major category for the years ended December 31, 2021, 2020 and 2019.
Categories are based upon internal classifications.
Year Ended December 31,
2021 2020 2019
Net Sales
Percentage
of Total Net
Sales Net Sales
Percentage
of Total Net
Sales Net Sales
Percentage
of Total Net
Sales
Notebooks/Mobile
Devices
$ 6,659.4 32.0 % $ 5,486.2 29.7 % $ 4,344.9 24.1 %
Netcomm Products
1,950.9 9.4 1,955.0 10.6 2,189.1 12.1
Desktops
1,203.6 5.8 1,132.4 6.1 1,547.3 8.6
Video 1,605.0 7.7 1,190.8 6.4 1,272.9 7.1
Enterprise and Data
Storage (Including Drives)
992.1 4.8 947.4 5.1 1,147.6 6.4
Other Hardware 4,358.6 20.9 4,121.6 22.3 3,980.4 22.1
Total Hardware 16,769.6 80.6 14,833.4 80.2 14,482.2 80.4
Software
(1)
2,802.4 13.5 2,581.0 14.0 2,585.0 14.3
Services
(1)
1,126.1 5.4 913.9 4.9 840.9 4.7
Other
(2)
122.7 0.5 139.2 0.9 124.3 0.6
Total Net sales
$ 20,820.8 100.0 % $ 18,467.5 100.0 % $ 18,032.4 100.0 %
(1) Certain software and services revenues are recorded on a net basis for accounting purposes. As a result, the
category percentage of net revenues is not representative of the category percentage of gross profits.
(2) Includes items such as delivery charges to customers.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
79
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 2021, 2020 and 2019
(dollars in millions)
Allowance for credit losses:
Balance at
Beginning
of Period
Charged to
Costs and
Expenses Deductions
(1)
Balance at
End of
Period
Year Ended December 31, 2021 $ 29.6 $ (5.4) $ (3.8) $ 20.4
Year Ended December 31, 2020 7.9 30.9 (9.2) 29.6
Year Ended December 31, 2019 7.0 2.2 (1.3) 7.9
(1) Primarily includes write-offs of uncollectible accounts.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s
Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s
management, including the Company’s Chief Executive Officer and Chief Financial Officer, has concluded that, as of the end
of such period, the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and
reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the
Exchange Act, and that information is accumulated and communicated to the Company’s management, including the
Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely discussions regarding required
disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in
Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement
preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures
may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021.
Management based this assessment on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in “Internal Control — Integrated Framework (2013 framework).”
As permitted by the Securities and Exchange Commission guidance for newly acquired businesses, management excluded its
assessment of internal control over financial reporting for Sirius Computer Solutions, Inc., which was acquired on December 1,
2021 and accounts for approximately 30% of consolidated total assets and 1% of consolidated net sales as of and for the year
ended December 31, 2021.
Based on its assessment, which excluded an internal control assessment of Sirius Computer Solutions, Inc., management
concluded that, as of December 31, 2021, the Company’s internal control over financial reporting is effective.
Ernst & Young LLP, independent registered public accounting firm, has audited the Consolidated Financial Statements of the
Company and the Company’s internal control over financial reporting and has included their reports herein.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2021 that
have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
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80
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of CDW Corporation and subsidiaries
Opinion on Internal Control Over Financial Reporting
We have audited CDW Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2021, based
on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, CDW Corporation and subsidiaries (the
Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021,
based on the COSO criteria.
As indicated in the accompanying Management’s Annual Report on Internal Control over Financial Reporting, management’s
assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal
controls of Sirius Computer Solutions, Inc., which is included in the 2021 consolidated financial statements of the Company
and constituted 30% of total assets as of December 31, 2021. Our audit of internal control over financial reporting of the
Company also did not include an evaluation of the internal control over financial reporting of Sirius Computer Solutions, Inc.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, and the related consolidated
statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period
ended December 31, 2021, and the related notes and the financial statement schedule listed in the Index at Item 15 (a) (2) and
our report dated February 28, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Chicago, Illinois
February 28, 2022
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
We have adopted The CDW Way Code, our code of business conduct and ethics, that is applicable to all of our coworkers and
directors. A copy of The CDW Way Code is available on our website at www.cdw.com. Within The CDW Way Code is a
Financial Integrity Code of Ethics that sets forth an even higher standard applicable to our executives, officers, members of our
internal disclosure committee and all managers and above in our finance department. We intend to disclose any substantive
amendments to, or waivers from, The CDW Way Code by posting such information on our website or by filing a Form 8-K, in
each case to the extent such disclosure is required by the rules of the SEC or Nasdaq.
See Part I - “Information about our Executive Officers” for the biographical information of our executive officers, which is
incorporated by reference in this Item 10. Other information required under this Item 10 is incorporated herein by reference to
our definitive proxy statement for our 2022 annual meeting of stockholders on May 19, 2022 (“2022 Proxy Statement”), which
we will file with the SEC on or before April 30, 2022.
Item 11. Executive Compensation
Information required under this Item 11 is incorporated herein by reference to the 2022 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information required under this Item 12 is incorporated herein by reference to the 2022 Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information required under this Item 13 is incorporated herein by reference to the 2022 Proxy Statement.
Item 14. Principal Accountant Fees and Services
Information required under this Item 14 is incorporated herein by reference to the 2022 Proxy Statement.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) Financial Statements and Schedules
The following documents are filed as part of this report:
(1) Consolidated Financial Statements:
Page
Report of Independent Registered Public Accounting Firm
43
Consolidated Balance Sheets as of December 31, 2021 and 2020
46
Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019
47
Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019
48
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021, 2020 and 2019
49
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019
50
Notes to Consolidated Financial Statements
51
(2) Financial Statement Schedules:
Page
Schedule II – Valuation and Qualifying Accounts
80
All other schedules are omitted since the required information is not present or is not present in amounts
sufficient to require submission of the schedule, or because the information required is included in the
Consolidated Financial Statements or notes thereto.
(b) Exhibits
2.1 Purchase and Sale Agreement, dated as of October 15, 2021, by and between Sirius Computer Solutions
Holdco, LP and CDW LLC previously filed as Exhibit 2.1 with CDW Corporation’s Form 8-K filed on
October 18, 2021 and incorporated herein by reference.
3.1 Sixth Restated Certificate of Incorporation of CDW Corporation, previously filed as Exhibit 3.2 with CDW
Corporation’s Form 8-K filed on May 21, 2021 and incorporated herein by reference.
3.2 Amended and Restated By-Laws of CDW Corporation, previously filed as Exhibit 3.1 with CDW
Corporation’s Form 8-K filed on December 23, 2019 and incorporated herein by reference.
3.3 Articles of Organization of CDW LLC, previously filed as Exhibit 3.3 with CDW Corporation’s Form S-4
filed on September 7, 2010 and incorporated herein by reference.
3.4 Amended and Restated Limited Liability Company Agreement of CDW LLC, previously filed as Exhibit 3.4
with CDW Corporation’s Form S-4 filed on September 7, 2010 and incorporated herein by reference.
3.5 Certificate of Incorporation of CDW Finance Corporation, previously filed as Exhibit 3.5 with CDW
Corporation’s Form S-4 filed on September 7, 2010 and incorporated herein by reference.
3.6 Amended and Restated By-Laws of CDW Finance Corporation, previously filed as Exhibit 3.1 with CDW
Corporation’s Form 10-Q filed on May 8, 2015 and incorporated herein by reference.
3.7 Articles of Organization of CDW Technologies LLC, previously filed as Exhibit 3.7 with CDW
Corporation’s Form 10-K filed on February 25, 2016 and incorporated herein by reference.
3.8 Operating Agreement of CDW Technologies LLC, previously filed as Exhibit 3.8 with CDW Corporation’s
Form 10-K filed on February 25, 2016 and incorporated herein by reference.
3.9 Articles of Organization of CDW Direct, LLC, previously filed as Exhibit 3.9 with CDW Corporation’s
Form S-4 filed on September 7, 2010 and incorporated herein by reference.
Exhibit
Number Description
Table of Contents
84
3.10 Amended and Restated Limited Liability Company Agreement of CDW Direct, LLC, previously filed as
Exhibit 3.10 with CDW Corporation’s Form S-4 filed on September 7, 2010 and incorporated herein by
reference.
3.11 Articles of Organization of CDW Government LLC, previously filed as Exhibit 3.11 with CDW
Corporation’s Form S-4 filed on September 7, 2010 and incorporated herein by reference.
3.12 Amended and Restated Limited Liability Company Agreement of CDW Government LLC, previously filed
as Exhibit 3.12 with CDW Corporation’s Form S-4 filed on September 7, 2010 and incorporated herein by
reference.
3.13 Articles of Organization of CDW Logistics LLC, previously filed as Exhibit 3.13 with CDW Corporation’s
Form 10-K filed on February 28, 2020 and incorporated herein by reference.
3.14 Limited Liability Company Agreement of CDW Logistics LLC, previously filed as Exhibit 3.14 with CDW
Corporation’s Form 10-K filed on February 28, 2020 and incorporated herein by reference.
3.15 Articles of Organization of Amplified IT LLC, previously filed as Exhibit 3.15 with CDW Corporation’s
Post-Effective Amendment No. 1 to Form S-3 filed on November 23, 2021 and incorporated herein by
reference.
3.16 Operating Agreement of Amplified IT LLC, previously filed as Exhibit 3.15 with CDW Corporation’s Post-
Effective Amendment No. 1 to Form S-3 filed on November 23, 2021 and incorporated herein by reference.
4.1* Description of CDW Corporation’s Common Stock.
4.2 Specimen Common Stock Certificate, previously filed as Exhibit 4.1 with CDW Corporation’s Amendment
No. 3 to Form S-1 filed on June 25, 2013 and incorporated herein by reference.
4.3 Base Indenture, dated as of December 1, 2014, by and among CDW LLC, CDW Finance Corporation, CDW
Corporation, the other guarantors party thereto and U.S. Bank National Association as trustee, previously
filed as Exhibit 4.1 with CDW Corporation’s Form 8-K filed on December 1, 2014 and incorporated herein
by reference.
4.4 First Supplemental Indenture, dated as of December 1, 2014, by and among CDW LLC, CDW Finance
Corporation, CDW Corporation, the other guarantors party thereto and U.S. Bank National Association as
trustee, previously filed as Exhibit 4.2 with CDW Corporation’s Form 8-K filed on December 1, 2014 and
incorporated herein by reference.
4.5 Form of 5.5% Senior Note (included as Exhibit A to Exhibit 4.4), previously filed as Exhibit 4.3 with CDW
Corporation’s Form 8-K filed on December 1, 2014 and incorporated herein by reference.
4.6
Fourth Supplemental Indenture, dated as of September 26, 2019, by and among the CDW LLC, CDW
Finance Corporation, CDW Corporation, the other guarantors party thereto and U.S. Bank National
Association as trustee, previously filed as Exhibit 4.2 with CDW Corporation’s Form 8-K filed on September
26, 2019 and incorporated herein by reference.
4.7 Form of 4.250% Senior Note (included as Exhibit A to Exhibit 4.6) previously filed as Exhibit 4.3 with
CDW Corporation’s Form 8-K filed on September 26, 2019 and incorporated herein by reference.
4.8
Fifth Supplemental Indenture, dated as of April 21, 2020, by and among CDW LLC, CDW Finance
Corporation, CDW Corporation, the other guarantors party thereto and U.S. Bank National Association as
trustee, previously filed as Exhibit 4.2 with CDW Corporation’s Form 8-K filed on April 21, 2020 and
incorporated herein by reference.
4.9
Form of 4.125% Senior Note (included as Exhibit A to Exhibit 4.8), previously filed as Exhibit 4.3 with
CDW Corporation’s Form 8-K filed on April 21, 2020 and incorporated herein by reference.
4.10
Sixth Supplemental Indenture, dated as of August 13, 2020, by and among CDW LLC, CDW Finance
Corporation, CDW Corporation, the other guarantors party thereto and U.S. Bank National Association as
trustee, previously filed as Exhibit 4.2 with CDW Corporation’s Form 8-K filed on August 13, 2020 and
incorporated herein by reference.
Exhibit
Number Description
Table of Contents
85
4.11
Form of 3.25% Senior Note (included as Exhibit A to Exhibit 4.10), previously filed as Exhibit 4.3 with
CDW Corporation’s Form 8-K filed on August 13, 2020 and incorporated herein by reference.
4.12 Seventh Supplemental Indenture, dated as of December 1, 2021, by and among CDW LLC, CDW Finance
Corporation, CDW Corporation, the other guarantors party thereto and U.S. Bank National Association,
previously filed as Exhibit 4.2 with CDW Corporation’s Form 8-K filed on December 1, 2021 and
incorporated herein by reference.
4.13 Form of 2.670% Senior Note (included as Exhibit A to Exhibit 4.12) previously filed as Exhibit 4.3 with
CDW Corporation’s Form 8-K filed on December 1, 2021 and incorporated herein by reference.
4.14 Eighth Supplemental Indenture, dated as of December 1, 2021, by and among CDW LLC, CDW Finance
Corporation, CDW Corporation, the other guarantors party thereto and U.S. Bank National Association,
previously filed as Exhibit 4.4 with CDW Corporation’s Form 8-K filed on December 1, 2021 and
incorporated herein by reference.
4.15 Form of 3.276% Senior Note (included as Exhibit A to Exhibit 4.14) previously filed as Exhibit 4.5 with
CDW Corporation’s Form 8-K filed on December 1, 2021 and incorporated herein by reference.
4.16 Ninth Supplemental Indenture, dated as of December 1, 2021, by and among CDW LLC, CDW Finance
Corporation, CDW Corporation, the other guarantors party thereto and U.S. Bank National Association,
previously filed as Exhibit 4.6 with CDW Corporation’s Form 8-K filed on December 1, 2021 and
incorporated herein by reference.
4.17 Form of 3.569% Senior Note (included as Exhibit A to Exhibit 4.16) previously filed as Exhibit 4.7 with
CDW Corporation’s Form 8-K filed on December 1, 2021 and incorporated herein by reference.
10.1 Credit Agreement, dated as of December 1, 2021, by and among CDW LLC, the lenders from time to time
party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the joint lead arrangers, joint
bookrunners, co-syndication agents and co-documentation agents party thereto, previously filed as Exhibit
10.1 with CDW Corporation’s Form 8-K filed on December 2, 2021 and incorporated herein by reference.
10.2 Revolving Credit Agreement, dated as of December 1, 2021, by and among CDW LLC, CDW Finance
Holdings Limited, the guarantors party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as
administrative agent, Wells Fargo Commercial Distribution Finance, LLC, as floorplan funding agent, and
the joint lead arrangers, joint bookrunners, co-syndication agents and co-documentation agents party thereto,
previously filed as Exhibit 10.2 with CDW Corporation’s Form 8-K filed on December 2, 2021 and
incorporated herein by reference.
10.3§ Compensation Protection Agreement, effective as of January 1, 2020, by and among CDW Corporation,
CDW LLC and Christine A. Leahy, previously filed as Exhibit 10.1 with CDW Corporation’s Form 8-K filed
on March 11, 2019 and incorporated herein by reference.
10.4§ Form of Compensation Protection Agreement (executive officers other than Christine A. Leahy), previously
filed as Exhibit 10.1 with CDW Corporation’s Form 10-Q filed on November 3, 2021 and incorporated
herein by reference.
10.5§ Form of Noncompetition Agreement under the Compensation Protection Agreement, previously filed as
Exhibit 10.3 with CDW Corporation’s Form 8-K filed on March 14, 2016 and incorporated herein by
reference.
10.6§ Letter Agreement, dated as of September 13, 2011, by and between CDW Direct, LLC and Christina M.
Corley, previously filed as Exhibit 10.31 with CDW Corporation’s Form 10-K filed on March 9, 2012 and
incorporated herein by reference.
10.7§ Form of Indemnification Agreement by and between CDW Corporation and its directors and executive
officers, previously filed as Exhibit 10.32 with CDW Corporation’s Amendment No. 2 to Form S-1 filed on
June 14, 2013 and incorporated herein by reference.
10.8§ CDW Corporation Senior Management Incentive Plan, as Amended and Restated Effective January 1, 2020,
previously filed as Exhibit 10.1 with CDW Corporation’s Form 10-Q filed on August 5, 2020 and
incorporated herein by reference.
10.9§ CDW Corporation Amended and Restated 2013 Long-Term Incentive Plan, previously filed as Exhibit 10.1
with CDW Corporation’s Form 8-K filed on May 19, 2016 and incorporated herein by reference.
Exhibit
Number Description
Table of Contents
86
10.10§ CDW Corporation 2021 Long-Term Incentive Plan, previously filed as Exhibit 10.1 with CDW
Corporation’s Form 8-K filed on May 19, 2021 and incorporated herein by reference.
10.11§ CDW Corporation Coworker Stock Purchase Plan (As Amended and Restated, Effective May 20, 2021),
previously filed as Exhibit 10.2 with CDW Corporation’s Form 10-Q filed on August 4, 2021 and
incorporated herein by reference.
10.12§ Form of Stock Option Agreement (executive officers) under the CDW Corporation Amended and Restated
2013 Long-Term Incentive Plan, previously filed as Exhibit 10.22 with CDW Corporation’s Form 10-K filed
on March 1, 2017 and incorporated herein by reference.
10.13§ Form of Stock Option Agreement (other than executive officers) under the CDW Corporation Amended and
Restated 2013 Long-Term Incentive Plan, previously filed as Exhibit 10.22 with CDW Corporation’s Form
10-K filed on March 1, 2018 and incorporated herein by reference.
10.14§* Form of Stock Option Agreement (executive officers) under the CDW Corporation 2021 Long-Term
Incentive Plan.
10.15§ Form of Performance Share Unit Award Agreement (executive officers) under the CDW Corporation
Amended and Restated 2013 Long-Term Incentive Plan, previously filed as Exhibit 10.2 with CDW
Corporation’s Form 10-Q filed on May 5, 2021 and incorporated herein by reference.
10.16§ Form of Performance Share Unit Award Agreement (other than executive officers) under the CDW
Corporation Amended and Restated 2013 Long-Term Incentive Plan, previously filed as Exhibit 10.24 with
CDW Corporation’s Form 10-K filed on March 1, 2018 and incorporated herein by reference.
10.17§* Form of Performance Share Unit Award Agreement (executive officers) under the CDW Corporation 2021
Long-Term Incentive Plan.
10.18§ Form of Restricted Stock Unit Award Agreement under the CDW Corporation Amended and Restated 2013
Long-Term Incentive Plan, previously filed as Exhibit 10.20 with CDW Corporation’s Form 10-K filed on
February 28, 2020 and incorporated herein by reference.
10.19§* Form of Restricted Stock Unit Award Agreement under the CDW Corporation 2021 Long-Term Incentive
Plan.
10.20§ Form of Non-Employee Director Restricted Stock Unit Award Agreement under the CDW Corporation
Amended and Restated 2013 Long-Term Incentive Plan, previously filed as Exhibit 10.2 with CDW
Corporation’s Form 10-Q filed on May 6, 2020 and incorporated herein by reference.
10.21§ Form of Non-Executive Chair Retainer Restricted Stock Unit Award Agreement under the CDW Corporation
Amended and Restated 2013 Long-Term Incentive Plan, previously filed as Exhibit 10.1 with CDW
Corporation’s Form 10-Q filed on May 6, 2020 and incorporated herein by reference.
10.22§ CDW LLC Nonqualified Deferred Compensation Plan, previously filed as Exhibit 10.3 with CDW
Corporation’s Form 10-Q filed on August 4, 2021 and incorporated herein by reference.
10.23§* CDW Director Deferred Compensation Plan.
10.24§
Letter Agreement, dated as of February 12, 2018 by and between CDW Limited and Collin B. Kebo,
previously filed as Exhibit 10.28 with CDW Corporation’s Form 10-K filed on March 1, 2018 and
incorporated herein by reference.
10.25§
Letter of Understanding, dated as of September 29, 2021, by and among CDW Corporation, CDW LLC and
Collin B. Kebo, previously filed as Exhibit 10.2 with CDW Corporation’s Form 10-Q filed on November 3,
2021 and incorporated herein by reference.
21.1* List of subsidiaries.
22.1*
List of Issuer and Guarantor subsidiaries.
23.1* Consent of Ernst & Young LLP.
Exhibit
Number Description
Table of Contents
87
31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities
Exchange Act of 1934.
31.2* Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities
Exchange Act of 1934.
32.1** Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350.
32.2** Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350.
101.INS* XBRL Instance Document
101.SCH* Inline XBRL Taxonomy Extension Schema Document
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
104* Cover Page Interactive Data File (embedded within the Inline XBRL document)
Exhibit
Number Description
* Filed herewith
** These items are furnished and not filed.
§ A management contract or compensatory arrangement required to be filed as an exhibit pursuant to Item 601 of
Regulation S-K.
Table of Contents
88
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
CDW CORPORATION
Date: February 28, 2022
By: /s/ Christine A. Leahy
Christine A. Leahy
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Table of Contents
90
Signature Title Date
/s/ Christine A. Leahy
President and Chief Executive Officer
(principal executive officer) and Director
February 28, 2022
Christine A. Leahy
/s/ Albert J. Miralles
Senior Vice President and Chief Financial Officer
(principal financial officer)
February 28, 2022
Albert J. Miralles
/s/ Ilaria Mocciaro
Vice President, Controller and Chief Accounting Officer
(principal accounting officer)
February 28, 2022
Ilaria Mocciaro
/s/ David W. Nelms Non-Executive Chairman of the Board February 28, 2022
David W. Nelms
/s/ Virginia C. Addicott Director February 28, 2022
Virginia C. Addicott
/s/ James A. Bell Director February 28, 2022
James A. Bell
/s/ Lynda M. Clarizio Director February 28, 2022
Lynda M. Clarizio
/s/ Paul J. Finnegan Director February 28, 2022
Paul J. Finnegan
/s/ Anthony R. Foxx
Director
February 28, 2022
Anthony R. Foxx
/s/ Sanjay Mehrotra
Director
February 28, 2022
Sanjay Mehrotra
/s/ Joseph R. Swedish Director February 28, 2022
Joseph R. Swedish
/s/ Donna F. Zarcone Director February 28, 2022
Donna F. Zarcone
Table of Contents
91
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CDW’s integrated technology
solutions and services helped
more than 250,000 business,
government, education and
healthcare customers in more
than 150 countries navigate
an increasingly complex
IT landscape and optimize
the return on their
technology investment.
At CDW, everything
we do revolves around
meeting the needs
of our customers.
COMPANY INFORMATION
Principal Location
CDW Corporation
75 Tri-State International
Lincolnshire, IL 60069
(847) 465-6000
Auditors
Ernst & Young LLP
155 North Wacker Drive
Chicago, IL 60606-1787
Common Stock Listing
e company’s common stock is listed on Nasdaq under
the trading symbol CDW.
Transfer Agent, Registrar and Dividend Disbursing Agent
Computershare
P.O. Box 505000
Louisville, KY 40233-5000
Email: web.queries@computershare.com
Telephone: (800) 736-3001 (toll free)
(781 ) 575-3100 (toll number)
Investor Relations Contact
Steven O’Brien
Vice President, Investor Relations
(847) 968-0238
investorr[email protected]om
Upon written request to Investor Relations, we will provide,
free of charge, a copy of our Form 10-K for the fiscal year
ended December 31, 2021.
CDW’s Annual Report, Form 10-K, Form 10-Q, proxy
statement and other filings with the Securities and
Exchange Commission, can be accessed on
investor.cdw.com under SEC filings.
Media Relations Contact
Sara Granack
Vice President, Corporate Communications & Reputation
(847) 419-7411
saragra@cdw.com
Forward-looking Statements
Statements in this annual report that are not statements
of historical fact are forward-looking statements within the
meaning of the federal securities laws, including without limitation
statements regarding the future financial performance of CDW.
ese statements involve risks and uncertainties that may cause
actual results or events to differ materially from those described
in such statements. Important factors that could cause actual
results or events to differ materially from CDW’s expectations, or
cautionary statements, are disclosed under the sections entitled
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” included in CDW’s
Annual Report on Form 10-K for the year ended December 31, 2021
(the “Form 10-K”) and in CDW’s subsequent Quarterly Reports
on Form 10-Q filed with the Securities and Exchange Commission.
Refer to page 3 of the Form 10-K for additional information. CDW
undertakes no obligation to publicly update or revise any forward-
looking statement as a result of new information, future events or
otherwise, except as required by law.
Use of Non-GAAP Financial Measures
Non-GAAP operating income, Non-GAAP operating income
margin, Non-GAAP net income, Non-GAAP net income per diluted
share and Free cash flow are not based on generally accepted
accounting principles in the United States (“non-GAAP”). CDW
believes these non-GAAP financial measures provide helpful
information with respect to the underlying operating performance
of CDW’s business, as they remove the impact of items that
management believes are not reflective of underlying operating
performance. For a reconciliation of these non-GAAP financial
measures to the applicable most comparable US GAAP financial
measures, see page 92 of this Annual Report. Reconciliations for
these financial measures are also included on the investor relations
section of the company website at www.cdw.com. Non-GAAP
measures used by CDW may differ from similar measures used
by other companies, even when similar terms are used to identify
such measures.
CDW CORPORATION
e printer and paper utilized for this report have been certified by the Forest Stewardship
Council® (FSC®), which promotes environmentally appropriate, socially beneficial and
economically viable management of the world’s forests. is report is on paper made from
mixed sources of post-industrial recycled and virgin fiber.
CDW’s integrated technology
solutions and services helped
more than 250,000 business,
government, education and
healthcare customers in more
than 150 countries navigate
an increasingly complex
IT landscape and optimize
the return on their
technology investment.
At CDW, everything
we do revolves around
meeting the needs
of our customers.
COMPANY INFORMATION
Principal Location
CDW Corporation
75 Tri-State International
Lincolnshire, IL 60069
(847) 465-6000
Auditors
Ernst & Young LLP
155 North Wacker Drive
Chicago, IL 60606-1787
Common Stock Listing
e company’s common stock is listed on Nasdaq under
the trading symbol CDW.
Transfer Agent, Registrar and Dividend Disbursing Agent
Computershare
P.O. Box 505000
Louisville, KY 40233-5000
Email: web.queries@computershare.com
Telephone: (800) 736-3001 (toll free)
(781 ) 575-3100 (toll number)
Investor Relations Contact
Steven O’Brien
Vice President, Investor Relations
(847) 968-0238
investorr[email protected]om
Upon written request to Investor Relations, we will provide,
free of charge, a copy of our Form 10-K for the fiscal year
ended December 31, 2021.
CDW’s Annual Report, Form 10-K, Form 10-Q, proxy
statement and other filings with the Securities and
Exchange Commission, can be accessed on
investor.cdw.com under SEC filings.
Media Relations Contact
Sara Granack
Vice President, Corporate Communications & Reputation
(847) 419-7411
saragra@cdw.com
Forward-looking Statements
Statements in this annual report that are not statements
of historical fact are forward-looking statements within the
meaning of the federal securities laws, including without limitation
statements regarding the future financial performance of CDW.
ese statements involve risks and uncertainties that may cause
actual results or events to differ materially from those described
in such statements. Important factors that could cause actual
results or events to differ materially from CDW’s expectations, or
cautionary statements, are disclosed under the sections entitled
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” included in CDW’s
Annual Report on Form 10-K for the year ended December 31, 2021
(the “Form 10-K”) and in CDW’s subsequent Quarterly Reports
on Form 10-Q filed with the Securities and Exchange Commission.
Refer to page 3 of the Form 10-K for additional information. CDW
undertakes no obligation to publicly update or revise any forward-
looking statement as a result of new information, future events or
otherwise, except as required by law.
Use of Non-GAAP Financial Measures
Non-GAAP operating income, Non-GAAP operating income
margin, Non-GAAP net income, Non-GAAP net income per diluted
share and Free cash flow are not based on generally accepted
accounting principles in the United States (“non-GAAP”). CDW
believes these non-GAAP financial measures provide helpful
information with respect to the underlying operating performance
of CDW’s business, as they remove the impact of items that
management believes are not reflective of underlying operating
performance. For a reconciliation of these non-GAAP financial
measures to the applicable most comparable US GAAP financial
measures, see page 92 of this Annual Report. Reconciliations for
these financial measures are also included on the investor relations
section of the company website at www.cdw.com. Non-GAAP
measures used by CDW may differ from similar measures used
by other companies, even when similar terms are used to identify
such measures.
CDW CORPORATION
e printer and paper utilized for this report have been certified by the Forest Stewardship
Council® (FSC®), which promotes environmentally appropriate, socially beneficial and
economically viable management of the world’s forests. is report is on paper made from
mixed sources of post-industrial recycled and virgin fiber.
CDW Corporation 2021 Annual Report
2021 ANNUAL REPORT
WE MAKE TECHNOLOGY WORK SO PEOPLE CAN
DO GREAT THINGS
CDW Corporation
75 Tri-State International
Lincolnshire, IL 60069
CDW Corporation 2021 Annual Report
2021 ANNUAL REPORT
WE MAKE TECHNOLOGY WORK SO PEOPLE CAN
DO GREAT THINGS
CDW Corporation
75 Tri-State International
Lincolnshire, IL 60069
CDW Corporation 2021 Annual Report
2021 ANNUAL REPORT
WE MAKE TECHNOLOGY WORK SO PEOPLE CAN
DO GREAT THINGS
CDW Corporation
75 Tri-State International
Lincolnshire, IL 60069
